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Knight-Swift Shares Tumble Most in Four Years Amid Driver Shortage
Knight-Swift Transportation Holdings Inc. lost almost a fifth of its market value July 26, marking the biggest drop in four years, after sales fell because of a lack of drivers.
The company, formed in a 2017 merger, said second-quarter revenue plummeted 17% at its Swift long-haul business while profit margins shrank at the refrigerated business. The company鈥檚 overall earnings missed analysts鈥 estimates by a penny, and its forecast for fourth-quarter profit was below estimates.
Knight-Swift Transportation Holdings ranks No. 5 on the Transport Topics Top 100 list of the largest North American for-hire carriers. It reported 18,381 company owned tractors and 4,688 owner operator tractors.
鈥淭he shortfall versus expectations appeared to be a function of fleet attrition, given driver recruiting challenges, as opposed to yield or margin performance,鈥 Robert W. Baird analyst Ben Hartford said in a note to investors July 26. 鈥淲hile management does not believe anything is going wrong at Swift with regard to the integration, we expect investor confidence to be diminished.鈥
Knight-Swift鈥檚 troubles contrast with a benign outlook for the transportation industry, which has benefited as a strong U.S. economy has boosted freight demand. Meanwhile, difficulties finding truck drivers and tighter restrictions on driver hours, has raised freight rates.
The shares fell 18% on July 26 to $29.50 at 11:16 a.m. in New York after tumbling 19%, the most intraday since July 2014. Knight-Swift had declined 18% this year through July 25, while a Standard & Poor鈥檚 index of 11 trucking companies dropped less than 1%.
The Swift operation鈥檚 decline contrasted with the company鈥檚 Knight unit, where second-quarter sales increased 34% and operating profit margin rose by more than 5 percentage points to 18.4%.
