Landstar System, Inc. (LSTR) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Landstar is being hurt by reduced demand for freight services and increased truck capacity. Highlighting the weak freight demand, the Cass Freight Shipment Index declined 0.7% year over year in November. This measure has deteriorated year over year since January 2024, confirming the overall declining trend.
Due to the weakness in demand, shipment volumes and rates are low. The top line has been suffering mainly due to the below-par performance of its key segment, namely, truck transportation. Revenues are likely to be weak going forward as well.
Driver shortage continues to be a major challenge facing the trucking industry. As old drivers retire, trucking companies find it difficult to hire drivers since the job does not appeal to the younger generation.
Partly due to these headwinds, shares of LSTR have plunged 10.1% so far this year compared with the industry’s loss of 0.4%.
YTD Price Comparison
Image Source: Zacks Investment Research
The negative sentiment surrounding the stock is evident from the fact that the Zacks Consensus Estimate for fourth-quarter and full-year 2024 earnings has been revised downward by 18.1 and 5.1%, respectively, over the past 90 days. The bearish alterations in estimate revisions underscore a notable decline in brokers' confidence in the stock.
Additionally, downbeat earnings expectations cast a shadow over a company’s prospects. For fourth-quarter 2024, LSTR’s earnings are expected to decline 16.1% year over year. For 2024, LSTR’s earnings are expected to decline 24.3% year over year.
LSTR’s Zacks Rank and Style Score
Landstar currently carries a Zacks Rank #4 (Sell). The company’s current Value Score of D shows its unattractiveness.
Stocks to Consider
Some better-ranked stocks from the Zacks Transportation sector are C.H. Robinson Worldwide, Inc. (CHRW) and Wabtec Corporation WAB, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CHRW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 10.29%.
The Zacks Consensus Estimate for CHRW’s 2024 earnings has been revised 6.4% upward over the past 90 days. CHRW has an expected earnings growth rate of 33.3% for 2024. Shares of the company have gained 21.6% so far this year.
WAB has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 9.46%.
The Zacks Consensus Estimate for WAB’s 2024 earnings has been revised 2.5% upward over the past 90 days. WAB has an expected earnings growth rate of 28.55% for 2024. Shares of the company have gained 49.4% so far this year.
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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.
