Knight-Swift Transportation (KNX): Buy, Sell, or Hold Post Q2 Earnings?

September 16, 2025 at 00:02 AM EDT

KNX Cover Image

Over the last six months, Knight-Swift Transportation’s shares have sunk to $41.60, producing a disappointing 11.5% loss - a stark contrast to the S&P 500’s 16.5% gain. This might have investors contemplating their next move.

Is now the time to buy Knight-Swift Transportation, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.

Why Do We Think Knight-Swift Transportation Will Underperform?

Even with the cheaper entry price, we're swiping left on Knight-Swift Transportation for now. Here are three reasons why KNX doesn't excite us and a stock we'd rather own.

1. Lackluster Revenue Growth

Long-term growth is the most important, but within industrials, a stretched 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. Knight-Swift Transportation Year-On-Year Revenue Growth

2. Free Cash Flow Margin Dropping

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Knight-Swift Transportation’s margin dropped by 9.1 percentage points over the last five years. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. If the longer-term trend returns, it could signal it is in the middle of an investment cycle. Knight-Swift Transportation’s free cash flow margin for the trailing 12 months was 4.5%.

Knight-Swift Transportation Trailing 12-Month Free Cash Flow Margin

3. New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Knight-Swift Transportation’s ROIC has decreased over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Knight-Swift Transportation Trailing 12-Month Return On Invested Capital

Final Judgment

We cheer for all companies making their customers lives easier, but in the case of Knight-Swift Transportation, we’ll be cheering from the sidelines. After the recent drawdown, the stock trades at 22.7× forward P/E (or $41.60 per share). This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are superior stocks to buy right now. We’d recommend looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.

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