What happened

Shares of trucking company Knight-Swift Transportation (NYSE:KNX) are tumbling along with the rest of the transport stocks today -- except in Knight-Swift's case, there appears to be an identifiable reason for the decline.

This morning, analysts at UBS downgraded Knight-Swift shares to neutral, and cut their price target on Knight-Swift stock by 16%, to $36 a share.

A semitruck rolling downhill

UBS thinks it's all downhill for Knight-Swift now -- but what if profit margin turns upward? Image source: Getty Images.

So what

UBS cited the same general malaise and "cyclical concerns" that are plaguing other transports as part of its reason for downgrading, warning that these concerns are pressuring Knight-Swift stock despite truckers generally enjoying a "very favorable underlying market." The worry, explains UBS, is that this favorable market won't last, with "rising risks" to the economy in 2019 that could decrease demand for shipping -- and hurt Knight's profits in the process.

At the same time, the fact that things are so very "favorable" right now means it's hard to imagine how things might get even better. In UBS's view, they can't, and it therefore sees no "catalysts" that could help to lift Knight's shares.

Now what

I'm going to have to disagree with UBS on this one, however, because it seems to me the most important catalyst Knight-Swift could enjoy is pretty obvious: margin.

As recently as 2015, Knight Transportation was earning an operating profit margin in the 13.7% range. Merging with less profitable Swift, however, swiftly pulled the combined company's margin down to its present level of just 9%. As Knight continues to integrate Swift into its operations, and (hopefully) improve its efficiency so that the Swift portion of the business begins earning profit at closer to the rate Knight has earned historically, then it seems to me that overall profit margin should rise -- and profits with it.

With Knight-Swift stock trading for a price-to-earnings ratio of less than 8, I think this catalyst alone could suffice to make Knight-Swift stock a profitable investment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.