Adjusted operating ratio improved to 82.8% in the first nine months of 2021 compared with 86.6% reported in the first nine months of 2020. KNX is benefitting from an improvement in the adjusted operating ratio. The long-term expected earnings per share (three to five years) growth rate for Knight-Swift is pegged at 15%.
Some better-ranked stocks in the broader Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here. Kirby currently carries a Zacks Rank #3 (Hold). This implies that the company does not have enough cash to meet its total debt burden. The carrier exited third-quarter 2021 with cash and cash equivalents of $54 million, whereas its long-term debt (including the current portion) was $1,206 million. Kirby expects its coastal market operating margin to be at or slightly below breakeven for the fourth quarter. The coastal market recorded a negative operating margin in the low-single digits during the September-end quarter. Persistent weakness in the coastal market (part of the marine transportation unit) is a concern. Revenues are likely to improve sequentially with operating margins around 10%. Barge utilization in the fourth quarter is expected in the high 80-90% range. Barge volumes are anticipated to benefit from the uptick in economic growth, pent-up demand and new chemical plants. Within the marine transportation unit, barge markets are expected to improve in the December quarter.
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With this reduction, Kirby expects to generate a free cash flow of $250-$290 million (previous expectation: $250-$310 million) for the current year. For 2021, the company now anticipates capital expenditures of $120-$130 million (previous outlook: $125-$145 million), indicating a decline of nearly 15% from 2020 levels. Kirby’s cost-management efforts are partly offsetting coronavirus-led adversities.