3 Reasons Why You Should Steer Clear of KNX and One Alternative Stock Worth Considering

Knight-Swift Transportation: Recent Performance and Investor Considerations

Over the past half year, Knight-Swift Transportation has delivered a 39% return, surpassing the S&P 500 by 31.8%. The stock has reached $61.47 per share, prompting investors to consider their next steps.

Should you view Knight-Swift Transportation as a potential addition to your portfolio, or does it carry significant risk?

Why We Believe Knight-Swift Transportation May Lag Behind

Despite its strong momentum, we remain cautious about Knight-Swift Transportation. Below are three key reasons for our skepticism, along with an alternative stock we prefer.

1. Slowing Revenue Expansion

While long-term growth is crucial, focusing solely on historical trends in the industrial sector can overlook emerging shifts in the market. Knight-Swift Transportation’s annualized revenue growth has slowed to 2.3% over the past two years, falling short of its five-year average. This deceleration could indicate evolving consumer preferences and the impact of low switching costs within the industry.

Knight-Swift Transportation Year-On-Year Revenue Growth

2. Declining Earnings Per Share

We closely monitor long-term changes in earnings per share (EPS) to assess whether a company’s growth is translating into profitability.

Unfortunately, Knight-Swift Transportation’s EPS has dropped by an average of 14.4% per year over the past five years, even as revenue increased by 9.8%. This trend suggests that the company’s expansion has not translated into improved profitability for shareholders.

Knight-Swift Transportation Trailing 12-Month EPS (Non-GAAP)

3. Diminishing Returns on New Investments

We favor companies that consistently generate high returns, but it’s the direction of return on invested capital (ROIC) that often drives market reactions. Knight-Swift Transportation’s ROIC has been on the decline in recent years. Combined with already modest returns, this pattern signals that lucrative growth opportunities may be limited for the company.

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

Our Verdict

While we appreciate businesses that deliver value to their clients, we are not optimistic about Knight-Swift Transportation at this time. The stock’s recent outperformance has pushed its forward P/E ratio to 30.6 (or $61.47 per share), reflecting high expectations. In our view, there are more attractive investment opportunities elsewhere.

Preferred Alternatives to Knight-Swift Transportation

Building a portfolio on outdated trends can be risky, especially as certain popular stocks become increasingly crowded trades.

For those seeking the next wave of high-growth opportunities, we recommend our Top 5 Strong Momentum Stocks for this week. This carefully selected group of high-quality stocks has delivered a remarkable 244% return over the past five years (as of June 30, 2025).

Our list features well-known leaders like Nvidia, which soared 1,326% from June 2020 to June 2025, as well as lesser-known companies such as Comfort Systems, which achieved a 782% five-year return. Discover your next potential winner with StockStory today.