Freight delivery company Knight-Swift Transportation (NYSE: KNX) met Wall Street’s revenue expectations in Q2 CY2025, but sales were flat year on year at $1.86 billion. Its non-GAAP profit of $0.35 per share was 5.1% above analysts’ consensus estimates.
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Knight-Swift Transportation (KNX) Q2 CY2025 Highlights:
- Revenue: $1.86 billion vs analyst estimates of $1.87 billion (flat year on year, in line)
- Adjusted EPS: $0.35 vs analyst estimates of $0.33 (5.1% beat)
- Adjusted EBITDA: $249.2 million vs analyst estimates of $281.1 million (13.4% margin, 11.4% miss)
- Adjusted EPS guidance for Q3 CY2025 is $0.39 at the midpoint, above analyst estimates of $0.38
- Operating Margin: 3.9%, in line with the same quarter last year
- Free Cash Flow Margin: 4.5%, down from 8.5% in the same quarter last year
- Market Capitalization: $7.32 billion
Company Overview
Covering 1.6 billion loaded miles in 2023 alone, Knight-Swift Transportation (NYSE: KNX) offers less-than-truckload and full truckload delivery services.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Knight-Swift Transportation’s 10.1% annualized revenue growth over the last five years was solid. Its growth beat the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Knight-Swift Transportation’s recent performance shows its demand has slowed as its annualized revenue growth of 4.3% over the last two years was below its five-year trend. We also note many other Ground Transportation businesses have faced declining sales because of cyclical headwinds. While Knight-Swift Transportation grew slower than we’d like, it did do better than its peers. 
This quarter, Knight-Swift Transportation’s $1.86 billion of revenue was flat year on year and in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 4.3% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and implies its newer products and services will not lead to better top-line performance yet.
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Operating Margin
Knight-Swift Transportation has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 9.2%, higher than the broader industrials sector.
Looking at the trend in its profitability, Knight-Swift Transportation’s operating margin decreased by 10.2 percentage points over the last five years. Many Ground Transportation companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction. We hope Knight-Swift Transportation can emerge from this a stronger company, as the silver lining of a downturn is that market share can be won and efficiencies found.
In Q2, Knight-Swift Transportation generated an operating margin profit margin of 3.9%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for Knight-Swift Transportation, its EPS declined by 8.2% annually over the last five years while its revenue grew by 10.1%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.
We can take a deeper look into Knight-Swift Transportation’s earnings to better understand the drivers of its performance. As we mentioned earlier, Knight-Swift Transportation’s operating margin was flat this quarter but declined by 10.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Knight-Swift Transportation, its two-year annual EPS declines of 38.3% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q2, Knight-Swift Transportation reported EPS at $0.35, up from $0.24 in the same quarter last year. This print beat analysts’ estimates by 5.1%. Over the next 12 months, Wall Street expects Knight-Swift Transportation’s full-year EPS of $1.33 to grow 37.7%.
Key Takeaways from Knight-Swift Transportation’s Q2 Results
It was encouraging to see Knight-Swift Transportation beat analysts’ EPS expectations this quarter. We were also glad its EPS guidance for next quarter slightly exceeded Wall Street’s estimates. On the other hand, its EBITDA missed and its revenue was in line with Wall Street’s estimates. Overall, this was a softer quarter. The stock traded up 1.8% to $46.47 immediately following the results.
Is Knight-Swift Transportation an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
