Freight delivery company Knight-Swift Transportation (NYSE: KNX) reported Q3 2026 results beating Wall Street’s revenue expectations, with sales up 14.2% year on year to $2.20 billion. Its non-GAAP profit of $0.83 per share was 9.5% above analysts’ consensus estimates.

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Company overview

Covering 1.6 billion loaded miles in 2023 alone, Knight-Swift Transportation (NYSE: KNX) offers less-than-truckload and full truckload delivery services.

Revenue growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Knight-Swift Transportation grew its sales at a decent 8% compounded annual growth rate. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Knight-Swift Transportation’s recent performance shows its demand has slowed as its annualized revenue growth of 3.5% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

This quarter, Knight-Swift Transportation reported year-on-year revenue growth of 14.2%, and its $2.20 billion of revenue exceeded Wall Street’s estimates by 1.4%.

Looking ahead, sell-side analysts expect revenue to grow 10.3% over the next 12 months, an improvement versus the last two years. This projection is healthy and implies its newer products and services will catalyze better top-line performance.

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Operating margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Knight-Swift Transportation was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.8% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Knight-Swift Transportation’s operating margin decreased by 12.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Knight-Swift Transportation’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q3, Knight-Swift Transportation generated an operating margin profit margin of 8.1%, up 5.5 percentage points year on year. The increase was driven by stronger leverage on its cost of sales (not higher efficiency with its operating expenses), as indicated by its larger rise in gross margin.

Earnings per share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Knight-Swift Transportation, its EPS declined by 14.4% annually over the last five years while its revenue grew by 8%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into Knight-Swift Transportation’s earnings to better understand the drivers of its performance. As we mentioned earlier, Knight-Swift Transportation’s operating margin expanded this quarter but declined by 12.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Knight-Swift Transportation, its two-year annual EPS growth of 53.4% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q3, Knight-Swift Transportation reported adjusted EPS of $0.83, up from $0.32 in the same quarter last year. This print beat analysts’ estimates by 9.5%. Over the next 12 months, Wall Street expects Knight-Swift Transportation’s full-year EPS to grow 99.6% from $1.86 to $3.71.

Key takeaways from Knight-Swift Transportation’s Q3 results

It was good to see Knight-Swift Transportation narrowly top analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its EPS guidance for next quarter slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 2.8% to $64.92 immediately after reporting.

Knight-Swift Transportation may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).