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Knight Swift (KNX) Slashes Q4 EPS Projection, Stock Down

Zacks Equity Research

Shares of Knight-Swift Transportation Holdings KNX declined 4.95% to $34 in after-market trading on Dec 19, following the company’s earnings per share guidance cut for fourth-quarter 2019. Detailed results of the December-end quarter will be announced in January 2020.

In fact, shares of this North American truckload transportation company have had a bearish run on the bourse, lately. In the past six months, shares of this Phoenix, AZ,-based company have underperformed its industry. The Knight-Swift stock gained 12.2% compared with its industry’s 21.8% appreciation.

Knight Swift’s Commentary

Knight-Swift now expects fourth-quarter 2019 adjusted earnings per share between 50 and 52 cents (earlier expectation was in the 62-65 cents band). The Zacks Consensus Estimate for the metric is currently pegged at 63 cents.

This Zacks Rank #3 (Hold) company blamed the persistent oversupply of truckload capacity in its industry as the primary reason for a trimmed outlook. Due to the excess supply scenario, the seasonal improvement in the freight market from the third to the fourth quarter has been subdued in nature, resulting in lower-than-expected seasonal high-yield freight opportunities. Consequently, the sequential rate increases were lesser than anticipated which, in turn, have dented revenues and operating income for the December quarter.

The gloomy freight scenario is highlighted in the latest Cass Freight Shipments Index report, suggesting that North American freight shipments declined for 12 consecutive months, starting December 2018. 

In October, Knight-Swift predicted first-quarter 2020 adjusted earnings per share in the 42-46 cents range. However, it now aims to revise the same, while releasing its fourth-quarter 2019 results next month. At the same time, the company intends to issue its earnings guidance for second-quarter 2020.

Stocks Worth a Look

Investors interested in the Zacks Transportation sector may consider Costamare CMRE, Allegiant Travel Company ALGT and Marten Transport MRTN. While Costamare and Allegiant sport a Zacks Rank #1 (Strong Buy), Marten Transport carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Costamare, Allegiant and Marten Transport have rallied more than 87%, 31% and 25%, respectively, over the past six months.

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