Editor's Note: 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. NEW YORK ( TheStreet) -- Knight Transportation (NYSE: KNX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- KNX's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 4.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- KNX's debt-to-equity ratio is very low at 0.09 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 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $44.27 million or 36.20% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.54%.
- KNIGHT TRANSPORTATION INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KNIGHT TRANSPORTATION INC increased its bottom line by earning $0.75 versus $0.71 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.75).
- 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 0.1% when compared to the same quarter one year prior, going from $16.56 million to $16.58 million.
-- Written by a member of TheStreet Ratings Staff