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Knife River Corporation (KNF)
NYSE:KNF
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Knife River Corporation
(NYSE:KNF)
73Outperform
Positive Factors
Market Expansion
KNF operates across 14 different states where more than 70% of total gross revenues are sourced from regions expanding above the US national average population growth.
Mergers and Acquisitions
The fragmented, localized market provides opportunities for M&A growth, with KNF maintaining an active acquisition pipeline and completing several acquisitions.
Strategic Initiatives
The EDGE value creation framework is incorporated to drive margin improvement and earnings growth through strategic areas like EBITDA margin improvement and operational enhancements.
Negative Factors
Dependency on Public Funding
Public funding is a key driver for project growth, and government infrastructure spend is a large driver of KNF’s earnings.
Industry Fragmentation
The fragmented and localized nature of the industry provides opportunities for consolidation, seen as a key growth driver for KNF.
Knife River Corporation (KNF) vs. S&P 500 (SPY)
Market Cap
$5.23B
Dividend YieldN/A
Average Volume (3M)489.76K
Price to Earnings (P/E)26.9
Beta (1Y)1.43
Revenue Growth2.42%
EPS Growth10.21%
CountryUS
Employees4,761
SectorBasic Materials
Sector Strength60
IndustryConstruction Materials
Share Statistics
EPS (TTM)3.54
Shares Outstanding56,612,705
10 Day Avg. Volume480,717
30 Day Avg. Volume489,763
Financial Highlights & Ratios
PEG Ratio2.63
Price to Book (P/B)N/A
Price to Sales (P/S)1.78
Price to Cash Flow (P/CF)7.50
P/FCF Ratio7.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$115.75Price Target Upside25.32% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Knife River Corporation Business Overview & Revenue Model
Company DescriptionKnife River Corporation provides aggregates-based construction materials and contracting services in the United States. It operates through six segments: Pacific, Northwest, Mountain, North Central, South, and Energy Services. The company mines, processes, and sells construction aggregates, including crushed stone and sand, and gravel; and produces and sells asphalt and ready-mix concrete, as well as provides contracting services to support the aggregate-based product lines, including heavy-civil construction, asphalt and concrete paving, and site development and grading. It serves federal, state, and municipal governments for various projects, such as highways, bridges, airports, schools, public buildings, and other public-infrastructure projects. The company was founded in 1917 and is based in Bismarck, North Dakota.
How the Company Makes MoneyKnife River Corporation generates revenue through the production and sale of construction materials such as aggregates, asphalt, and ready-mixed concrete. The company operates a network of quarries, production facilities, and distribution centers to supply these materials to a diverse customer base, including contractors, builders, and governmental entities. Key revenue streams include direct sales of aggregates and construction products, as well as contracting services for infrastructure and building projects. The company's earnings are significantly influenced by factors such as construction industry demand, government infrastructure spending, and regional market conditions. Additionally, Knife River may engage in strategic partnerships or acquisitions to expand its market presence and enhance its product offerings.
Knife River Corporation Financial Statement Overview
Summary
Knife River Corporation exhibits strong financial health with consistent revenue growth and improved profitability. The balance sheet reflects a solid equity base and stable leverage, while cash flow operations are robust. However, the EBITDA margin decrease and substantial total debt require attention.Income Statement
Knife River Corporation showed a commendable financial performance with consistent revenue growth over the years, reaching $2.9 billion in 2024. The gross profit margin and net profit margin have improved, indicating effective cost management. The EBIT margin has also shown an upward trajectory, reflecting operational efficiency. However, the EBITDA margin decreased slightly in 2024, signaling potential areas for improvement in depreciation or amortization costs management.82
Very Positive
Balance Sheet
The Debt-to-Equity ratio is relatively stable, indicating manageable leverage levels. Return on Equity has improved significantly, demonstrating effective use of shareholder funds. The Equity Ratio shows a solid financial position with a strong equity base. However, the total debt remains substantial, requiring careful management to maintain financial stability.75
Positive
Cash Flow
The company has maintained healthy operating cash flows, with a robust Operating Cash Flow to Net Income ratio. Despite a decline in Free Cash Flow in 2024, the overall cash flow position is strong, supported by prudent capital expenditure. The Free Cash Flow to Net Income ratio indicates efficient conversion of income into cash flow, though improvements in Free Cash Flow growth would enhance liquidity further.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.90B | 2.83B | 2.53B | 2.23B | 2.18B | Gross Profit |
| 569.83M | 538.93M | 347.27M | 346.95M | 370.58M | EBIT |
| 316.19M | 296.40M | 164.55M | 191.08M | 214.50M | EBITDA |
| 463.11M | 427.09M | 310.81M | 290.90M | 302.46M | Net Income Common Stockholders |
| 201.68M | 182.87M | 72.92M | 129.75M | 147.32M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 281.13M | 262.32M | 221.29M | 13.85M | 0.00 | Total Assets |
| 2.85B | 2.60B | 2.51B | 2.18B | 0.00 | Total Debt |
| 726.76M | 726.37M | 925.29M | 734.52M | 0.00 | Net Debt |
| 445.63M | 464.05M | 704.00M | 720.67M | 0.00 | Total Liabilities |
| 1.38B | 1.33B | 1.48B | 1.23B | 0.00 | Stockholders Equity |
| 1.48B | 1.27B | 1.03B | 952.84M | 0.00 |
| Cash Flow | Free Cash Flow | |||
| 149.90M | 211.44M | 29.28M | 7.01M | 96.53M | Operating Cash Flow |
| 322.32M | 335.73M | 207.44M | 181.24M | 232.40M | Investing Cash Flow |
| -294.80M | -117.89M | -155.88M | -398.27M | -185.85M | Financing Cash Flow |
| -8.71M | 34.39M | -55.32M | 223.80M | -47.95M |
Knife River Corporation Technical Analysis
Positive
92.36
Price Trends
96.50
Negative
98.96
Negative
89.92
Positive
Market Momentum
-0.87
Negative
48.15
Neutral
35.63
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KNF, the sentiment is Positive. The current price of 92.36 is above the 20-day moving average (MA) of 91.85, below the 50-day MA of 96.50, and above the 200-day MA of 89.92, indicating a neutral trend. The MACD of -0.87 indicates Negative momentum. The RSI at 48.15 is Neutral, neither overbought nor oversold. The STOCH value of 35.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KNF.
Knife River Corporation Risk Analysis
Knife River Corporation disclosed 45 risk factors in its most recent earnings report. Knife River Corporation reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Knife River Corporation Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $5.23B | 26.87 | 14.71% | ― | 2.42% | 10.21% | |
72 Outperform | $30.82B | 34.05 | 11.79% | 0.79% | -4.68% | -1.73% | |
71 Outperform | $9.22B | 63.67 | 3.31% | ― | 49.49% | -68.49% | |
66 Neutral | $8.69B | 9.20 | 8.39% | 1.45% | -5.07% | 417.07% | |
66 Neutral | $7.57B | 16.26 | 33.51% | 0.44% | 0.64% | -1.15% | |
63 Neutral | $29.15B | 14.76 | 22.83% | 0.64% | -3.56% | 70.93% | |
47 Neutral | $2.64B | -3.21 | -21.68% | 3.30% | 4.19% | -30.23% |
* Basic Materials Sector Average
Performance Comparison
KNF
Knife River Corporation
95.21
16.36
20.75%
CX
Cemex SAB
5.69
-3.33
-36.92%
EXP
Eagle Materials
235.20
-29.64
-11.19%
MLM
Martin Marietta Materials
492.47
-114.42
-18.85%
VMC
Vulcan Materials
240.10
-26.64
-9.99%
SUM
Summit Materials
52.49
9.75
22.81%
Knife River Corporation Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -5.04% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive sentiment overall, with Knife River Corporation achieving record results in 2024, driven by strategic price increases, successful acquisitions, and a strong project backlog. While challenges were noted in the Energy Services segment and increased SG&A costs, the company's growth strategy and margin improvements suggest a strong outlook for 2025.Highlights
Record-Breaking Revenue and Growth
Knife River Corporation achieved record full-year revenue, adjusted EBITDA, and adjusted EBITDA margin in 2024. Over the last two years, adjusted EBITDA grew by 48% and margins improved by 360 basis points.
Price Increases and Margin Improvements
Annual price increases of 7% for aggregates and 10% for ready-mix were achieved, leading to improved margins across aggregates, ready-mix, and asphalt product lines.
Strong Backlog and New Projects
The company starts 2025 with a backlog of $746 million, 13% higher than the previous year, including a $96 million, three-year road construction project in Idaho.
Strategic Acquisitions and Growth Initiatives
Knife River invested $131 million on six acquisitions in 2024 and has approved $522 million for growth capital expenditures in 2025, including the pending $454 million acquisition of Strata Corporation.
Segment Performance and Opportunities
All geographic segments reported record EBITDA in 2024, with notable growth in the Northwest region (24% increase in EBITDA) and Central region, which entered 2025 with a higher backlog.
Lowlights
Energy Services Segment Decline
Revenue and EBITDA in the Energy Services segment were down from 2023, although the company expects growth potential moving forward.
SG&A Costs and Investment Needs
SG&A increased by 5% over the prior year, driven by higher labor costs and expenses related to the acquisition program, leading to a $20 million step-up in investment for 2025.
Company Guidance
In the recent conference call, Knife River Corporation detailed its financial guidance for 2025, projecting consolidated revenue between $3 billion and $3.2 billion, with adjusted EBITDA ranging from $485 million to $535 million. The company highlighted a strong backlog valued at $746 million, representing a 13% increase from the previous year. The call emphasized the company's commitment to its EDGE strategy, which contributed to a 48% growth in adjusted EBITDA and a 360 basis point increase in margins over the past two years. Key initiatives include a focus on dynamic pricing, operational excellence through PIT Crews, and strategic acquisitions, including the pending acquisition of Strata Corporation for $454 million. The company anticipates mid-single-digit price increases across aggregates, ready-mix, and asphalt product lines in 2025, with expectations of low single-digit volume growth, leveraging robust public infrastructure spending and emerging private sector opportunities.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.