Rating Change #5

Knight Transportation Inc ( KNX) has been upgraded by TheStreet Ratings from hold to buy. 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, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • KNX's revenue growth has slightly outpaced the industry average of 15.0%. Since the same quarter one year prior, revenues rose by 18.7%. 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 1.98, which demonstrates the ability of the company to cover short-term liquidity needs.
  • KNIGHT TRANSPORTATION INC has improved earnings per share by 5.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KNIGHT TRANSPORTATION INC increased its bottom line by earning $0.71 versus $0.61 in the prior year. This year, the market expects an improvement in earnings ($0.73 versus $0.71).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Road & Rail industry and the overall market, KNIGHT TRANSPORTATION INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for KNIGHT TRANSPORTATION INC is rather low; currently it is at 20.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.30% significantly trails the industry average.

Knight Transportation, Inc., together with its subsidiaries, operates as a short to medium-haul truckload carrier of general commodities in the United States. The company has a P/E ratio of 22.2, above the average transportation industry P/E ratio of 21.9 and above the S&P 500 P/E ratio of 17.7. Knight Transportation has a market cap of $1.21 billion and is part of the services sector and transportation industry. Shares are down 18.3% year to date as of the close of trading on Friday.

You can view the full Knight Transportation Ratings Report or get investment ideas from our investment research center.

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