Landstar SystemLSTR is currently grappling with a weakness in freight demand. As a result, LSTR’s management lowered the guidance for second-quarter 2023 revenues and earnings per share (EPS) owing to continued weakness in freight demand. The trucking company now expects EPS in the range of $1.75-$1.85 (prior view: $1.9-$2). The Zacks Consensus Estimate is currently pegged at $1.89.
LSTR expects revenues to be between $1.325 billion and $1.375 billion (earlier view: $1.40 billion and $1.45 billion). The Zacks Consensus Estimate is currently pegged at $1.39 billion.
The updated outlook reflected a year-over-year decline of 16-18% in truckload volumes in the first seven weeks of the second quarter of 2023. Considering the same time frame, revenue per load on loads hauled via truck declined 14-16% year over year. The expected uptick in freight market conditions during May did not materialize. This contributed to the management’s decision to slash the projections.
Moreover, 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. Further, escalating operating expenses, led by high fuel costs, are denting the prospects of the truck transport providers.
These factors might have weighed on the company’s share price movement, which has gained 18.2% so far this year but underperformed the industry’s growth of 22.5%.
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Zacks Rank & Stocks to Consider
Landstar currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings CPA and Allegiant Travel Company ALGT. Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings has an expected earnings growth rate of 75.42% for the current year. CPA delivered a trailing four-quarter earnings surprise of 14.60%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 25.5% over the past 90 days. Shares of CPA have soared 28.6% over the past six months.
Allegiant has an expected earnings growth rate of more than 100% for the current year. ALGT delivered a trailing four-quarter earnings surprise of 79.78%, on average.
The Zacks Consensus Estimate for ALGT’s current-year earnings has improved 46.5% over the past 90 days. Shares of ALGT have surged 87% over the past six months.
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