KNX
Knight-Swift Transportation Holdings Inc.
$74.33
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 156.5% above fair value
You pay
$74.33
Bear
$11.57
Fair
$28.98
Bull
$46.38
Bear
$11.57
-84.4%
$2.14 × 4x + net cash
Fair
$28.98
-61.0%
$2.14 × 6x + net cash
Bull
$46.38
-37.6%
$2.14 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($2.14)
Implied Market Multiple
34.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $84.08 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $28.98 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 10.0x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $84.08 (from 36 analysts). Our estimate is 94% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing