Knight-Swift Transportation Holdings (NYSE:KNX) is back in the spotlight following recent upgrades from both Deutsche Bank and Stifel. Analyst sentiment is turning more optimistic as the company heads into its quarterly earnings report.

Knight-Swift's recent share price rally, fueled by analyst upgrades and anticipation around new trucking regulations, has helped the stock regain some ground after a period of lackluster momentum. While the 1-year total shareholder return is still slightly negative, investors are watching closely for signs that this renewed optimism could lead to a longer-term turnaround.

If you're looking to expand your search after this wave of transportation sector upgrades, it's a great moment to discover fast growing stocks with high insider ownership.

With analyst upgrades and shifting regulatory dynamics fueling expectations, the critical question now is whether Knight-Swift is trading below its true value or if the market has already factored in all the potential upside.

Most Popular Narrative: 20.7% Undervalued

With the narrative’s fair value set at $52.21, Knight-Swift Transportation Holdings sits well below this estimate based on its last close price of $41.41. This gap draws attention as optimism returns to the sector ahead of regulatory developments and anticipated freight demand recovery.

The continued expansion and integration of the LTL (less-than-truckload) segment is driving shipment and customer growth, with significant operating leverage expected as new facilities and network investments mature. This supports long-term revenue growth and potential margin improvement.

Want to know why analysts see so much upside? The calculations behind this valuation rely on powerful growth projections in earnings, revenues, and margins. These assumptions are typically reserved for high-growth industries. Uncover the specific drivers that fuel such a bullish scenario.

Result: Fair Value of $52.21 (UNDERVALUED)

However, ongoing integration costs and persistent soft freight demand remain clear risks. These factors could challenge Knight-Swift's path to margin expansion and recovery.

Another View: Price-To-Earnings Raises Questions

While the prevailing view is that Knight-Swift is undervalued, its price-to-earnings ratio stands at 40.8x. This figure is notably higher than the industry average of 24.1x and the peer average of 27.2x. The fair ratio, by comparison, is just 20.9x. This wide gap means the market is already pricing in a lot of future growth, which could amplify valuation risk if expectations slip. Is the current optimism truly justified, or is it a sign of overexuberance?

Build Your Own Knight-Swift Transportation Holdings Narrative

If you have a different perspective or want to dig deeper into the numbers yourself, you can easily build your own in just a few minutes, Do it your way.

A great starting point for your Knight-Swift Transportation Holdings research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.