Today’s news: Knight-Swift Transportation Holdings (KNX) raises earnings guidance.
Knight-Swift Transportation Holdings (KNX – yield 0.8%) issued new quarterly adjusted earnings guidance this morning, pleasing investors and sending the stock up 6% upon the market’s open. Here are the former and current projections:
In this week’s update, I wrote, “The 2018 consensus EPS estimate has been consistently rising for over a year, out of synch with the stock’s poor performance.” Wall Street’s full-year 2018 EPS estimate was previously $2.36 per share, 71% higher than last year’s $1.38. The new revised earnings estimate will necessarily be revised up to about $2.56.
The next question will be, “Will analysts also revise their 2019 EPS projections?” As of yesterday, the 2019 consensus estimate was $2.65. I’ll have more info in next week’s update.
The stock is on a strong uptrend amid a recovery in the broader stock market. There’s upside price resistance at 32, and again at 35. Please be aware – not only with KNX, but with most quality stocks and with the broader market – that big short-term moves are almost always followed by pullbacks. Those pullbacks don’t mean that there’s anything wrong with the company or the economy. Those pullbacks are merely a trading phenomenon during which stocks “catch their breath”, if you will, and prepare for their next advance. Presuming that the 2019 earnings growth rate remains attractive at Knight-Swift, I’ll move the stock to a Buy recommendation during the inevitable pullback. Hold.