Option Trade of the Day 
Swift Transportation Co (NYSE:SWFT) Calls
Wednesday, April 29, 2015

**Buy the SWFT Aug 2015 25.000 call (SWFT150821C00025000) at or under $1.60. Place a protective stop limit at $0.65 and a pre-determined sell at $3.00.**


by Ian Harvey

Wednesday, April 29, 2015


**Rolling, Rolling, Rolling!**

Swift Transportation Co (NYSE: SWFT), a provider of transportation and logistics services, reported higher first-quarter earnings, continuing the broad trend toward improved results in the truckload and logistics sector.

Swift, based in Phoenix, reported net income tripled to $37.8 million, or 26 cents per share, as results improved in the truckload, dedicated and refrigerated units. Revenue rose less than 1% to $1.02 billion.

Swift’s results, outlined in a letter to shareholders from Chairman Jerry Moyes and other executives, said the company once again delivered positive operating results.

“We are pleased by these trends, specifically as they relate to revenue growth and profitability improvement within our truckload and Central Refrigerated Service segments,” the letter said.

Profit before interest and taxes nearly doubled in the truckload segment to $57.1 million, even though revenue dipped about 3% to $538.3 million. The refrigerated business doubled profit on that basis to $4.78 million as revenue fell 10% to $95.6 million.

Dedicated revenue rose 12% to $217.8 million, and profit rose nearly 25% to $14.4 million. Intermodal unit results were similar to the 2014 quarter as revenue dipped 1% and the truck/rail unit lost about $1 million.

Swift, which ranks No. 6 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, was helped by nearly $50 million lower fuel costs and almost $13 million less in interest expense. Adjusted earnings per share were 29 cents, compared with 12 cents, and year-earlier net income was $12.3 million.

Technical Outlook

Swift Transportation Co is currently trading 14.71% below its 52-week-high, 35.51% above its 52-week-low. The 12-months range for the stock is $18.53 – $29.44.

Swift Transportation Co has a price to earnings ratio of 22.42 versus S&P 500 average of 17.22. SWFT stock price has underperformed the S&P 500 by 13%.

The Truck Company is currently valued at $3.58 billion and its share price closed the last trading session at $25.11.

The stock has a 50-day moving average of $26.73 and a 200-day moving average of $26.66.

Swift Transportation Co current short interest stands at 14.03 million shares. It has decreased by 3% from the same period of last month. Around 14% of the company’s shares, which are float, are short sold. With a 10-days average volume of 2.2 million shares, the number of days required to cover the short positions stand at 6.4 days.


Swift Transportation Co. reported earnings yesterday consisting of:-

• Net income for the first quarter of $37.8 million or $0.26 per share, compared to $12.3 million or $0.09 per share for the year-ago quarter.

• Excluding items, adjusted earnings per share for the first quarter increased to $0.29 from $0.12 in the prior year quarter.

• Operating revenue for the first quarter rose to $1.02 billion from $1.01 billion a year ago.

• Analysts polled by Thomson Reuters expected the company to earn $0.28 per share on revenue of $1.06 billion for the first quarter. Analysts' estimates typically exclude special items.

Key Areas of Focus

1. Improved Driver Safety

Swift Transportation witnessed poor driver safety conditions in 2014, which is evident from its increased insurance claims. The company undertook several initiatives to address this issue, including establishing a dialogue about safety between drivers and their managers.

Swift is also installing enhanced safety equipment in all its new trucks. Some of this equipment includes collision avoidance systems, lane departure alerts, and automatic transmissions. The company also expects these measures to help improve the new trucks’ fuel efficiency.

Swift Transportation decided to accelerate its trade cycle to about 3.5 years. This is expected to help lower maintenance charges, increase fuel efficiency, and improve driver satisfaction. The company also aims to improve its driver miles by creating new planning teams.

2. Growing Mexican Operations

Overall, product assembly and manufacturing has grown substantially in Mexico, which helped grow Swift Transportation’s northbound freight. This will help improve the company’s top line and bottom line. Swift expects its Mexican operations to be a substantial revenue driver.

3. Growing the Logistics Business

Swift Transportation’s logistics business is also growing at a good pace, with 4Q14 revenues increasing at 20% and the operating income by 40%. Other growth areas include shop services provided to owner-operators and other third parties, equipment leasing activities, and captive insurance premiums for insurance products provided to owner-operators.

4. Other Areas of Focus

Swift Transportation is working on improving the efficiency in some of the new dedicated locations by filling in backhauls, or carrying cargo on the equipment’s return journey, as well as subsidizing equipment. Swift is also acquiring equipment from two major manufacturers—Kenworth and Freightliner—to streamline its maintenance requirements in shops throughout the US.

Hedge Fund Popularity

Ken Griffin‘s Citadel Investment Group has increased its stakes in Swift Transportation Co according to a series of Schedule 13G forms filed with the SEC.

Griffin’s managed futures fund is known for its secretive money minting trading algorithms and more than $170 billion in assets under management that make it one of the biggest hedge funds in business. The market value of its equity portfolio stands at $82.66 billion, according to its latest 13F, with technology and consumer discretionary sectors amassing the largest shares.

Citadel’s latest move was to substantially bump its stake in Swift Transportation Co by acquiring some 3.63 million shares of the company, which put the total holding at about 4.90 million shares. The new holding represents 5.4% of the $3.58 billion company’s outstanding stock.

Among the billionaires, five had investments totaling $183.18 million in the company at the end of 2014. Israel Englander is one of them and his fund Millennium Management held about 2.9 million shares of Swift Transportation Co.

Analysts Opinions

Deutsche Bank reissued their buy rating on shares of Swift Transportation in a research report released on Tuesday 14th April.

Another recent analyst activity consisted of UBS who initiated their coverage on the stock with Buy rating on February 18.

Stifel Nicolaus reiterated their Buy stance on January 29, and increased their price target on SWFT stock from $32 to $33. This corresponds to a 31.42% upside from the last closing price. On the date of report, the stock closed at $25.61.

There are currently twenty analysts that cover SWFT stock. Of those twenty, eighteen have a Buy rating, two have a Hold rating. On a consensus basis this yields to a Buy rating. The consensus target price stands at $31.47.


Founded in 1966 by Jerry Moyes, Swift Transportation has grown to be one of the top trucking companies in the US with a large, diverse fleet.

However, Swift Transportation is one of the most underrated superstars in the transportation industry and its stock represents a great investment opportunity today, so investors/traders should take a closer look and strongly consider initiating this call option trade.

Therefore, based on the facts above the following option trade of the day is recommended…..

**Buy the SWFT Aug 2015 25.000 call (SWFT150821C00025000) at or under $1.60. Place a protective stop limit at $0.65 and a pre-determined sell at $3.00.**

Please Note: This is a recommendation, but it is up to the individual trader to consider when to enter the trade, adjust the stop-loss and pre-determined sell positions, according to his/her risk tolerance!

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.

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