KNX
Knight-Swift Transportation Holdings Inc.
$61.21
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 419.1% above fair value
You pay
$61.21
Bear
$8.58
Fair
$11.79
Bull
$15.01
Bear
$8.58
-86.0%
$2.14 × 4x
Fair
$11.79
-80.7%
$2.14 × 6x
Bull
$15.01
-75.5%
$2.14 × 7x
Adjust Assumptions
5.5x
2.14$
Key Value Driver
Through-cycle normalized EPS ($2.14)
Implied Market Multiple
28.5x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (36 analysts)
$86.18
Divergence from AlphaVal
86%
Summary
Using 7-year normalized EPS of $2.14 at a 6x cycle multiple, the base-case value is $11.79 per share. P/TBV cross-check: 8.2x.
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 8.2x 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 $86.18 (from 36 analysts). Our estimate is 86% 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