Swift Transportation Co (SWFT) — SWFT stock soared 21% on Jan. 26 after the company reported better-than-expected fourth-quarter earnings.
The largest truckload carrier in North America delivered adjusted earnings per share of 53 cents versus the consensus estimate of 47 cents. While sales fell short of estimates for $1.11 billion, coming in at $1.09 billion, management said the company benefited from lower fuel costs and a better-than-expected tax rate.
Following the earnings announcement, S&P Capital IQ Equity Research reiterated its “Buy” rating on SWFT stock, as well as its 12-month price target of $20. At the same time, its analysts lowered their 2016 EPS estimate to $1.51 from $1.66 and initiated a 2017 estimate of $1.75.
Capital IQ notes a shortage of drivers and a sharp decrease in fuel surcharges are negatively impacting revenues, but also that this should be offset by rising freight rates, especially in an improving economy, and an increase in the number of loads carried per container. Additionally, Swift’s size makes it likely to capture market share from struggling smaller carriers. Capital IQ analysts expect revenue growth of 1.6% in 2016 and 6% in 2017.
Turning to the chart, SWFT stock made a double-bottom in January, flashing two buy signals from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR). As it rallied from that bottom, SWFT stock pierced the 50-day moving average, attacked its bearish resistance line and successfully jumped through the 200-day moving average at $17.95.
After a run of more than 55% from the Jan. 20 low at $11.74, expect a profit-taking pullback to the 50-day moving average at about $16.50. This would be a great price to enter a good ’til canceled (GTC) buy order.
Buy SWFT stock at $16.50 for a trade to $20 and a potential short-term gain of more than 20%.
