Why Swift Transportation (SWFT) Stock Is Up Today

NEW YORK (TheStreet) -- Swift Transportation (SWFT) was gaining 9.2% to $20.92 Thursday after confirming its earnings guidance for the third quarter.

The trucking company said it "is comfortable" with its previously announced third quarter earnings guidance of 33 cents to 36 cents a share. Analysts surveyed by Thomson Reuters expect earnings of 35 cents a share for the third quarter.

Swift Transportation said it "felt it prudent to provide public updates on the current quarter" ahead of the American Trucking Associations Conference and because it was unable to participate in RBD Capital Markets' Industrials Conference.

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The company said its driver academies are full, and that it is experiencing record recruiting weeks. Swift Transportation said unseated truck count fell about 20% from the end of the second quarter, and utilization of its linehaul fleet improved 3% year over year in the current quarter.

TheStreet Ratings team rates SWIFT TRANSPORTATION CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate SWIFT TRANSPORTATION CO (SWFT) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SWIFT TRANSPORTATION CO's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. 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, SWIFT TRANSPORTATION CO increased its bottom line by earning $1.10 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.27 versus $1.10).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Road & Rail industry and the overall market, SWIFT TRANSPORTATION CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The debt-to-equity ratio is very high at 4.37 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, SWFT's quick ratio is somewhat strong at 1.44, demonstrating the ability to handle short-term liquidity needs.
  • You can view the full analysis from the report here: SWFT Ratings Report

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