Shares of Landstar System LSTR have been displaying an uptrend despite the prevalent pandemic-ravaged scenario. The stock has rallied 12.9% in the past three months compared with the 8.7% increase of its industry.
Let’s look into the factors that are working in favor of this currently Zacks Rank #1 (Strong Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter earnings has been revised 20.4% upward over the past 60 days. For 2020, the consensus mark for the metric has moved 5.1% north in the same time frame. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because the same serves as a key indicator in determining the price of a stock.
Upbeat Guidance on Improving Freight Scenario: As freight environment gradually recovers with the ramp-up of economic activities, Landstar System recently provided a bullish update on its third-quarter 2020 outlook.
The company has seen improvement in trucking volumes in the first two months of the third quarter and so far in September. Based on this observation, it now anticipates the number of loads hauled via truck to inch up in the low-single-digit percentage range during the current quarter from the year-ago period. Additionally, truck revenue per load is expected to increase in the low-single-digit percentage range year over year in the same period. For the third quarter, revenues are now predicted between $1.02 billion and $1.06 billion. The revenue guidance indicates a marked improvement from $885-$935 million anticipated previously. Additionally, earnings are now forecast between $1.40 and $1.46 per share for the September quarter. Previously, the company estimated third-quarter earnings in the range of $1.11-$1.17 per share.
Bullish Industry Rank: The industry, to which Landstar System belongs, currently has a Zacks Industry Rank of 31 (of 250 plus groups). Such a solid rank places the company in the top 12% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
Other Stocks to Consider
Investors interested in the Zacks Transportation sector may also consider a few other top-ranked stocks like FedEx Corporation FDX, Knight-Swift Transportation Holdings KNX and Expeditors International of Washington EXPD. FedEx sports the same rank as Landstar System while Knight-Swift and Expeditors carry a Zacks Rank #2 (Buy) at present.
Shares of FedEx, Knight-Swift and Expeditors have rallied more than 113%, 41% and 58%, respectively, in the past six months.
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KnightSwift Transportation Holdings Inc. (KNX): Free Stock Analysis Report
Landstar System, Inc. (LSTR): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.