On Thursday, Evercore ISI adjusted its outlook on Knight Transportation (NYSE: NYSE:KNX), reducing the price target to $55 from the previous $60, while keeping an In Line rating for the stock. Knight Transportation's first-quarter earnings for 2024 matched the preliminary figures announced last week, with an adjusted EPS of $0.12. When accounting for core losses from the discontinued insurance business, the EPS increases to $0.20, aligning with the preannounced range but falling short of the average analyst expectation of $0.39.
The company also reaffirmed its second-quarter earnings guidance of $0.26 to $0.30 per share and introduced a third-quarter forecast of $0.31 to $0.35 per share. Unless there is a significant uptick during the peak season and a substantial sequential increase in the fourth quarter, Knight Transportation's full-year EPS for 2024 is projected to be in the low $1 range. Even with anticipated improvements in volumes, pricing, and margins, the predicted earnings per share for 2025 are likely to remain below $3.
The report suggests that the period of earnings misses and downward adjustments that lasted over a year might be coming to an end, as the new management team seems poised to avoid underestimating ongoing challenges. However, the starting point for a potential cyclical rebound is considered low, necessitating optimistic assumptions to reach a mid-cycle earnings rate before 2026. Consequently, the valuation based on peak versus trough earnings appears high.
In response to these factors, Evercore ISI has lowered its EPS estimates for Knight Transportation for the years 2024 and 2025 to $1.25 (down from $1.88) and $2.75 (down from $3.50), respectively. The revised price target and earnings estimates reflect the firm's cautious outlook on the company's near-term performance.
InvestingPro Insights
Knight Transportation (NYSE: KNX) has demonstrated a commitment to shareholder returns, raising its dividend for 4 consecutive years and maintaining dividend payments for 21 consecutive years. This could be of interest to investors looking for companies with a stable dividend history. Additionally, Knight Transportation is trading at a high earnings multiple with a P/E ratio of 35.98, which indicates that the stock may be priced at a premium compared to its earnings. The company has been profitable over the last twelve months, which is a positive sign for potential investors.
InvestingPro Data also reveals that Knight Transportation has a market cap of $7.81 billion and a revenue growth of 1.23% over the last twelve months as of Q1 2024. Despite the modest growth, the company's stock is trading near its 52-week low, which might present a buying opportunity for value investors.
For those looking to delve deeper into the financials and future prospects of Knight Transportation, there are additional InvestingPro Tips available on the platform. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore the numerous other tips, including analyst earnings revisions and valuation multiples, to make an informed investment decision.
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