Knight-Swift Transportation Holdings Inc. (KNX) stock intrinsic value fair value estimate & owner earnings analysis

Knight-Swift is a large North American trucking company. Its Truckload segment hauls freight for shippers across the United States and Mexico; it also runs a less-than-truckload (LTL) network under the AAA Cooper name, plus smaller logistics and other services. Earnings come from moving freight at a margin above the cost of drivers, fuel, equipment and insurance, and they swing widely with the freight cycle. How we measure earnings. We start from operating cash flow, remove the cash effect of changes in receivables, payables and other working-capital items, deduct stock compensation as a real cost, and deduct the cost of replacing worn-out trucks and trailers. For replacement cost we use purchases of equipment less the cash received from selling used equipment, because the company routinely recycles its fleet through sales ($292 million of proceeds in 2025). A small share of spending is treated as growth when revenue is rising. Per diluted share this gives roughly $1.75 (2018), $1.14 (2019), $3.43 (2020), $6.68 (2021), $5.76 (2022), $0.94 (2023), $1.79 (2024) and $2.30 (2025). 2025 operating cash flow of $1.27 billion was helped by about $365 million of working-capital release, mainly from a new receivables purchase agreement under which the company sold roughly $478 million of customer receivables for cash. That is a one-time release, not a lasting earnings gain, so we remove it. The company's own cash-flow statement also shows lease payments running alongside a matching non-cash lease charge; we treat these as an offsetting pair and leave both in. Starting level. We use the median of 2018 through 2025, about $2.04 per share. That window covers two strong stretches (2018 and 2020 to 2022) and two weak ones (2019, and 2023 to 2025), so it spans a full freight cycle. We excluded no year. We start at 2018 because the September 2017 merger of Knight and Swift changed the business, so earlier years are not comparable. Intangible amortisation is small next to equipment depreciation and is not what drives value here; the real wear-and-tear is captured through replacement spending. In 2025 the company also recorded non-cash write-downs tied to folding its Abilene truckload brand into Swift and rebranding its MME and DHE LTL businesses under the AAA Cooper name; the company has made several acquisitions in recent years, and we count acquisition write-offs as a risk in the low case. Growth. Owner earnings per share rose about 28% in 2025 ($1.79 to $2.30), but that year was helped by cost actions and lower net equipment spending, and we credit none of that as ongoing growth. Year-one growth in every case is zero. We give no credit for share gains, a freight-market upturn, acquisitions or margin expansion, because none is contracted or a steady, repeatable annual process. Freight-market recovery is a market event, not something we can attribute to this business. The three cases. Low case ($10 per share): earnings stay depressed at about $1.10 per share (near the 2019 and 2023 lows) for ten years, then fade to zero over a further ten as older assets and brands are not replaced with anything we can point to. Debt of about $1.1 billion at the end of 2025 (down from $1.6 billion a year earlier) adds to the risk in a prolonged trough. Middle case ($34 per share): the 2018 to 2025 median of about $2.04 per share continues, flat and without growth. What supports that is a record of positive owner earnings in every one of the eight years, including the trough years, and a large, established network across the US and Mexico with over 300 locations. High case ($57 per share): earnings settle at about $3.43 per share, the level the company reached in 2020, and continue at that level. It is well below the 2021 and 2022 peak, which reflected exceptional freight conditions we do not assume repeat. What would make this wrong. The key assumption is that the past eight years describe the business going forward. Note that 2023, at $0.94, was hit by heavy equipment purchases of about $1.07 billion, so a prolonged period of high replacement costs would push the outcome toward the low case. The value measure is after interest, so we do not subtract debt again. We could not fully reconcile year-to-year swings in equipment spending from the filings alone; they are timing-sensitive, which is why we use a multi-year median. Margin-of-safety price. Because earnings are cyclical and the low case is roughly less than a third of the middle case, the estimate calls for a substantial discount, about 44% below the middle case, which puts the margin-of-safety price near $19 per share.