Weak On High Volume: Knight Transportation (KNX)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Knight Transportation ( KNX) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Knight Transportation as such a stock due to the following factors:

  • KNX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.2 million.
  • KNX has traded 201,012 shares today.
  • KNX is trading at 2.75 times the normal volume for the stock at this time of day.
  • KNX is trading at a new low 3.03% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on KNX:

Knight Transportation, Inc., together with its subsidiaries, operates as a short-to-medium haul truckload carrier of general commodities primarily in the United States. It operates through two segments, Trucking and Logistics. The stock currently has a dividend yield of 0.9%. KNX has a PE ratio of 2. Currently there are 7 analysts that rate Knight Transportation a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Knight Transportation has been 1.0 million shares per day over the past 30 days. Knight Transportation has a market cap of $2.3 billion and is part of the services sector and transportation industry. The stock has a beta of 0.62 and a short float of 9.3% with 8.68 days to cover. Shares are down 16.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Knight Transportation as a 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, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 16.5%. Growth in the company's revenue appears to have helped boost 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 1.67, which demonstrates the ability of the company to cover short-term liquidity needs.
  • KNIGHT TRANSPORTATION INC reported significant earnings per share improvement 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 $1.25 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus $1.25).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 55.1% when compared to the same quarter one year prior, rising from $19.06 million to $29.56 million.
  • Net operating cash flow has significantly increased by 59.70% to $58.27 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 23.58%.

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