Knight-Swift (KNX): Can LTL Growth Drive Call Options?

Knight-Swift Transportation Holdings Inc. is a major North American freight transportation company. Its core business provides full truckload, LTL ('less-than-truckload'), intermodal, and other complementary services. The company serves a diverse customer base across the US and Mexico, transporting general commodities using its equipment, technology, and driving associates. Knight-Swift's strategy focuses on operating with industry-leading margins and growth, achieved through both organic expansion and strategic acquisitions. The company differentiates itself by offering a comprehensive suite of transportation solutions, including regional truckload and LTL presence, cost control, and leveraging technology. This allows them to provide multiple transportation services and equipment configurations that satisfy customers' needs. The company aims to be a preferred transportation solutions provider, emphasizing superior on-time service and value.

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KNX presents a moderately bullish, yet uncertain outlook. The most recent close of $44.87 shows a positive change of 3.031% from the previous day. However, the overall trend over the last 90 days has been volatile, with a significant decline followed by a recent recovery. The price is currently trading above its 21-day EMA ($44.30), which suggests short-term upward momentum. The 50-day SMA ($43.01) is below the current price, while the 200-day SMA ($44.97) is slightly above, acting as potential resistance. The MACD histogram is negative (-0.267), suggesting bearish momentum, but the MACD line is above the signal line, indicating a possible shift towards bullishness. The RSI of 49.29 is neutral. The stochastic oscillator shows the %K line at 25.67, and the %D line at 29.17, indicating that the stock is not overbought. The ADX is at 19.17, indicating a weak trend. Overall, the technical indicators present a mixed picture, with some signs of short-term bullish momentum but also underlying weakness and uncertainty.

Knight-Swift's MD&A presents a mixed but cautiously optimistic outlook. Total revenue increased modestly by 1.1% year-over-year to $5,613.4 million for the year-to-date period, while for the quarter ended September 30, 2025, total revenue increased 2.7% to $1,927.1 million. The LTL segment saw substantial revenue growth of 24.0% year-over-year, reaching $1,133.8 million for the year-to-date, driven by the DHE acquisition and organic expansion. However, the Truckload segment experienced a revenue decline of 3.0%, with revenue excluding fuel surcharge and intersegment transactions at $3,205.7 million. The LTL segment's operating ratio deteriorated by 590 basis points to 97.4%. For the six-month period, `Net cash provided by operating activities` was $543.4 million. Management anticipates that depreciation and amortization expense will increase as a percentage of revenue, excluding truckload and LTL fuel surcharge, as the company intends to purchase, rather than enter into operating leases, for a majority of its revenue equipment or terminal improvements during 2025. The company expects Truckload segment revenue to be 'fairly stable sequentially' with improving operating margins, while LTL revenue growth is projected between 10%-15% year-over-year in the fourth quarter. Overall, Knight-Swift is focusing on optimizing its network, particularly in the LTL segment, and expects market conditions to improve over the medium term.

The Knight-Swift Transportation second quarter earnings call presented a mixed outlook. While adjusted EPS increased 45.8% year-over-year to $0.35 and the adjusted operating ratio improved by 80 basis points to 93.8%, revenue growth was modest at 1.9%, excluding fuel surcharge. Adam Miller noted 'a general softness in freight demand for most of the quarter, especially on the West Coast,' which was attributed to 'unprecedented trade actions.' The Truckload segment saw an 87.5% increase in adjusted operating income despite a 2.7% decrease in revenue, driven by cost-cutting measures. The LTL segment experienced strong revenue growth of 28.4%, but adjusted operating income declined 36.8% due to expansion costs and integration efforts, though management expects that 'progress on these initiatives and ongoing new business awards will partially offset the normal seasonal pattern of operating margin degradation in the back half of the year.' Guidance for Q3 2025 projects adjusted EPS in the range of $0.36 to $0.42, assuming stable conditions and some seasonality. The company is focused on cost control and efficiency improvements to leverage future market opportunities. Overall, the tone suggests cautious optimism, with an emphasis on managing costs and capitalizing on future growth potential.

KNX's financial performance presents a somewhat stable but mixed picture. Revenue has fluctuated, starting at $1,822.5M in Q1 2024 and reaching $1,927.1M in Q3 2025, indicating moderate top-line variability. Gross profit margins have been inconsistent, ranging from a low of 6.5% in Q2 2025 to a high around 24% in several other quarters, suggesting potential challenges in maintaining profitability. The operating cash flow has been positive in the latest two quarters, registering $216.5M in Q2 2025 and $217.5M in Q3 2025, a positive sign after a lower $37.3M in Q1 2024. Total debt has decreased from $3,277.3M in Q4 2024 to $1,709.4M in Q3 2025, indicating improved solvency and reduced financial risk. Overall, while revenue and profitability metrics show some volatility, the positive cash flow and debt reduction suggest a cautiously optimistic outlook for KNX.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.