Intrinsic value of Knight Transportation, Inc. - KNX

Previous Close

$33.83

  Intrinsic Value

$40.00

stock screener

  Rating & Target

hold

+18%

Previous close

$33.83

 
Intrinsic value

$40.00

 
Up/down potential

+18%

 
Rating

hold

We calculate the intrinsic value of KNX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  5,483
  5,639
  5,811
  6,000
  6,205
  6,428
  6,667
  6,924
  7,199
  7,492
  7,803
  8,135
  8,486
  8,859
  9,253
  9,670
  10,111
  10,576
  11,067
  11,584
  12,129
  12,704
  13,309
  13,946
  14,617
  15,323
  16,065
  16,846
  17,667
  18,530
Variable operating expenses, $m
  4,781
  4,904
  5,041
  5,191
  5,354
  5,530
  5,720
  5,923
  6,141
  6,373
  6,186
  6,449
  6,728
  7,023
  7,336
  7,666
  8,016
  8,384
  8,773
  9,184
  9,616
  10,072
  10,551
  11,056
  11,588
  12,148
  12,736
  13,355
  14,006
  14,691
Fixed operating expenses, $m
  110
  113
  115
  118
  120
  123
  126
  129
  131
  134
  137
  140
  143
  146
  150
  153
  156
  160
  163
  167
  171
  174
  178
  182
  186
  190
  194
  199
  203
  207
Total operating expenses, $m
  4,891
  5,017
  5,156
  5,309
  5,474
  5,653
  5,846
  6,052
  6,272
  6,507
  6,323
  6,589
  6,871
  7,169
  7,486
  7,819
  8,172
  8,544
  8,936
  9,351
  9,787
  10,246
  10,729
  11,238
  11,774
  12,338
  12,930
  13,554
  14,209
  14,898
Operating income, $m
  592
  622
  655
  691
  731
  775
  822
  872
  926
  984
  1,480
  1,545
  1,615
  1,689
  1,768
  1,851
  1,939
  2,032
  2,130
  2,233
  2,343
  2,458
  2,580
  2,708
  2,843
  2,985
  3,135
  3,292
  3,458
  3,632
EBITDA, $m
  1,327
  1,365
  1,408
  1,455
  1,506
  1,562
  1,622
  1,686
  1,756
  1,829
  1,908
  1,992
  2,081
  2,176
  2,276
  2,382
  2,494
  2,612
  2,737
  2,869
  3,009
  3,156
  3,310
  3,474
  3,645
  3,826
  4,017
  4,217
  4,428
  4,650
Interest expense (income), $m
  0
  50
  54
  58
  62
  67
  72
  77
  83
  90
  96
  104
  111
  120
  128
  138
  147
  158
  169
  180
  192
  205
  219
  233
  248
  264
  280
  298
  316
  336
  356
Earnings before tax, $m
  542
  568
  597
  629
  665
  703
  745
  789
  837
  888
  1,376
  1,434
  1,496
  1,561
  1,630
  1,704
  1,781
  1,863
  1,950
  2,041
  2,138
  2,239
  2,347
  2,460
  2,579
  2,705
  2,837
  2,976
  3,122
  3,276
Tax expense, $m
  146
  153
  161
  170
  179
  190
  201
  213
  226
  240
  372
  387
  404
  421
  440
  460
  481
  503
  526
  551
  577
  605
  634
  664
  696
  730
  766
  803
  843
  885
Net income, $m
  395
  414
  436
  460
  485
  513
  543
  576
  611
  648
  1,005
  1,047
  1,092
  1,139
  1,190
  1,244
  1,300
  1,360
  1,423
  1,490
  1,561
  1,635
  1,713
  1,796
  1,883
  1,974
  2,071
  2,172
  2,279
  2,392

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  8,123
  8,354
  8,609
  8,889
  9,193
  9,523
  9,877
  10,258
  10,665
  11,099
  11,561
  12,052
  12,573
  13,124
  13,709
  14,326
  14,979
  15,668
  16,395
  17,161
  17,969
  18,821
  19,717
  20,661
  21,655
  22,700
  23,800
  24,957
  26,173
  27,452
Adjusted assets (=assets-cash), $m
  8,123
  8,354
  8,609
  8,889
  9,193
  9,523
  9,877
  10,258
  10,665
  11,099
  11,561
  12,052
  12,573
  13,124
  13,709
  14,326
  14,979
  15,668
  16,395
  17,161
  17,969
  18,821
  19,717
  20,661
  21,655
  22,700
  23,800
  24,957
  26,173
  27,452
Revenue / Adjusted assets
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
Average production assets, $m
  4,787
  4,923
  5,073
  5,238
  5,417
  5,611
  5,820
  6,045
  6,284
  6,540
  6,812
  7,102
  7,409
  7,734
  8,078
  8,442
  8,827
  9,233
  9,661
  10,113
  10,589
  11,091
  11,619
  12,175
  12,761
  13,377
  14,025
  14,706
  15,423
  16,177
Working capital, $m
  208
  214
  221
  228
  236
  244
  253
  263
  274
  285
  297
  309
  322
  337
  352
  367
  384
  402
  421
  440
  461
  483
  506
  530
  555
  582
  610
  640
  671
  704
Total debt, $m
  996
  1,068
  1,147
  1,234
  1,328
  1,430
  1,540
  1,658
  1,784
  1,919
  2,062
  2,214
  2,376
  2,547
  2,728
  2,919
  3,122
  3,335
  3,561
  3,798
  4,049
  4,313
  4,591
  4,883
  5,191
  5,515
  5,856
  6,215
  6,592
  6,988
Total liabilities, $m
  2,518
  2,590
  2,669
  2,755
  2,850
  2,952
  3,062
  3,180
  3,306
  3,441
  3,584
  3,736
  3,897
  4,069
  4,250
  4,441
  4,643
  4,857
  5,082
  5,320
  5,571
  5,834
  6,112
  6,405
  6,713
  7,037
  7,378
  7,737
  8,114
  8,510
Total equity, $m
  5,605
  5,764
  5,940
  6,133
  6,343
  6,571
  6,815
  7,078
  7,359
  7,658
  7,977
  8,316
  8,675
  9,056
  9,459
  9,885
  10,335
  10,811
  11,312
  11,841
  12,399
  12,986
  13,605
  14,256
  14,942
  15,663
  16,422
  17,220
  18,060
  18,942
Total liabilities and equity, $m
  8,123
  8,354
  8,609
  8,888
  9,193
  9,523
  9,877
  10,258
  10,665
  11,099
  11,561
  12,052
  12,572
  13,125
  13,709
  14,326
  14,978
  15,668
  16,394
  17,161
  17,970
  18,820
  19,717
  20,661
  21,655
  22,700
  23,800
  24,957
  26,174
  27,452
Debt-to-equity ratio
  0.180
  0.190
  0.190
  0.200
  0.210
  0.220
  0.230
  0.230
  0.240
  0.250
  0.260
  0.270
  0.270
  0.280
  0.290
  0.300
  0.300
  0.310
  0.310
  0.320
  0.330
  0.330
  0.340
  0.340
  0.350
  0.350
  0.360
  0.360
  0.370
  0.370
Adjusted equity ratio
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  395
  414
  436
  460
  485
  513
  543
  576
  611
  648
  1,005
  1,047
  1,092
  1,139
  1,190
  1,244
  1,300
  1,360
  1,423
  1,490
  1,561
  1,635
  1,713
  1,796
  1,883
  1,974
  2,071
  2,172
  2,279
  2,392
Depreciation, amort., depletion, $m
  735
  744
  753
  763
  775
  787
  800
  814
  829
  845
  428
  447
  466
  486
  508
  531
  555
  581
  608
  636
  666
  698
  731
  766
  803
  841
  882
  925
  970
  1,017
Funds from operations, $m
  1,130
  1,158
  1,189
  1,223
  1,260
  1,300
  1,344
  1,390
  1,440
  1,493
  1,433
  1,494
  1,558
  1,626
  1,698
  1,775
  1,855
  1,941
  2,031
  2,126
  2,226
  2,332
  2,444
  2,561
  2,685
  2,816
  2,953
  3,097
  3,249
  3,409
Change in working capital, $m
  5
  6
  7
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
Cash from operations, $m
  1,125
  1,152
  1,182
  1,216
  1,252
  1,292
  1,334
  1,380
  1,430
  1,482
  1,421
  1,481
  1,544
  1,612
  1,683
  1,759
  1,839
  1,923
  2,012
  2,106
  2,206
  2,311
  2,421
  2,537
  2,660
  2,789
  2,925
  3,068
  3,218
  3,376
Maintenance CAPEX, $m
  -293
  -301
  -310
  -319
  -329
  -341
  -353
  -366
  -380
  -395
  -411
  -428
  -447
  -466
  -486
  -508
  -531
  -555
  -581
  -608
  -636
  -666
  -698
  -731
  -766
  -803
  -841
  -882
  -925
  -970
New CAPEX, $m
  -121
  -136
  -150
  -165
  -179
  -194
  -209
  -224
  -240
  -256
  -272
  -289
  -307
  -325
  -344
  -364
  -385
  -406
  -428
  -452
  -476
  -502
  -528
  -556
  -585
  -616
  -648
  -682
  -717
  -754
Cash from investing activities, $m
  -414
  -437
  -460
  -484
  -508
  -535
  -562
  -590
  -620
  -651
  -683
  -717
  -754
  -791
  -830
  -872
  -916
  -961
  -1,009
  -1,060
  -1,112
  -1,168
  -1,226
  -1,287
  -1,351
  -1,419
  -1,489
  -1,564
  -1,642
  -1,724
Free cash flow, $m
  711
  715
  722
  732
  743
  757
  773
  790
  810
  831
  738
  763
  791
  821
  852
  887
  923
  962
  1,003
  1,047
  1,094
  1,143
  1,195
  1,250
  1,309
  1,370
  1,435
  1,504
  1,576
  1,653
Issuance/(repayment) of debt, $m
  67
  72
  79
  87
  94
  102
  110
  118
  126
  135
  143
  152
  161
  171
  181
  191
  202
  214
  225
  238
  250
  264
  278
  293
  308
  324
  341
  359
  377
  397
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  67
  72
  79
  87
  94
  102
  110
  118
  126
  135
  143
  152
  161
  171
  181
  191
  202
  214
  225
  238
  250
  264
  278
  293
  308
  324
  341
  359
  377
  397
Total cash flow (excl. dividends), $m
  778
  787
  802
  819
  838
  859
  882
  908
  936
  966
  881
  915
  952
  992
  1,034
  1,078
  1,125
  1,176
  1,229
  1,285
  1,344
  1,407
  1,473
  1,543
  1,617
  1,694
  1,776
  1,862
  1,953
  2,049
Retained Cash Flow (-), $m
  -144
  -159
  -176
  -193
  -210
  -227
  -245
  -263
  -281
  -300
  -319
  -339
  -359
  -381
  -403
  -426
  -450
  -475
  -502
  -529
  -558
  -587
  -619
  -651
  -686
  -721
  -759
  -798
  -839
  -883
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  634
  628
  625
  625
  628
  632
  638
  646
  655
  666
  562
  577
  593
  611
  630
  652
  675
  700
  727
  756
  787
  819
  854
  892
  931
  973
  1,017
  1,064
  1,114
  1,167
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  608
  574
  544
  515
  487
  459
  431
  403
  376
  349
  267
  246
  225
  205
  185
  166
  147
  129
  112
  96
  81
  68
  56
  45
  36
  28
  22
  16
  12
  9
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Knight Transportation, Inc. is a provider of multiple truckload transportation and logistics services, which involve the movement of trailer or container loads of freight from origin to destination for a single customer. The Company operates through two segments: Trucking and Logistics. Its Trucking segment consists of three operating units: dry van truckload, temperature-controlled truckload and drayage services. The Trucking segment provides truckload transportation, including services of various products, goods and materials. Its Logistics segment consists of two operating units: freight brokerage services and rail intermodal. It provides logistics, freight management and other non-trucking services to its customers, through its Logistics segment. It provides a range of truckload and logistics services through its nationwide network of service centers, truckload tractor fleets and its contractual access to third-party capacity providers. It operates primarily in the United States.

FINANCIAL RATIOS  of  Knight Transportation, Inc. (KNX)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

KNX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KNX stock intrinsic value calculation we used $5344 million for the last fiscal year's total revenue generated by Knight Transportation, Inc.. The default revenue input number comes from 0001 income statement of Knight Transportation, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KNX stock valuation model: a) initial revenue growth rate of 2.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for KNX is calculated based on our internal credit rating of Knight Transportation, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Knight Transportation, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KNX stock the variable cost ratio is equal to 87.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $108 million in the base year in the intrinsic value calculation for KNX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Knight Transportation, Inc..

Corporate tax rate of 27% is the nominal tax rate for Knight Transportation, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KNX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KNX are equal to 87.3%.

Life of production assets of 15.9 years is the average useful life of capital assets used in Knight Transportation, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KNX is equal to 3.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5460.949 million for Knight Transportation, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 172.952 million for Knight Transportation, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Knight Transportation, Inc. at the current share price and the inputted number of shares is $5.9 billion.

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