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 impressive record of earnings per share growth, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and relatively poor performance when compared with the S&P 500 during the past year.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 8.7%. Since the same quarter one year prior, revenues slightly increased by 3.4%. 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 0.10 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 2.33, which demonstrates the ability of the company to cover short-term liquidity needs.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Road & Rail industry average. The net income increased by 17.9% when compared to the same quarter one year prior, going from $16.36 million to $19.29 million.
- The gross profit margin for KNIGHT TRANSPORTATION INC is rather low; currently it is at 22.50%. Regardless of KNX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, KNX's net profit margin of 8.20% is significantly lower than the same period one year prior.
- Net operating cash flow has significantly decreased to $32.16 million or 67.41% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
-- Written by a member of TheStreet Ratings Staff