NEW YORK (TheStreet) -- Knight Transportation (NYSE:KNX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a decline in the stock price during the past year. Highlights from the ratings report include:
- KNX's revenue growth has slightly outpaced the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 17.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- KNX's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, KNX has a quick ratio of 2.38, which demonstrates the ability of the company to cover short-term liquidity needs.
- After a year of stock price fluctuations, the net result is that KNX's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- The gross profit margin for KNIGHT TRANSPORTATION INC is rather low; currently it is at 18.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.80% significantly trails the industry average.
-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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