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Key Reasons to Hold on to the Landstar (LSTR) Stock For Now
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Landstar System (LSTR - Free Report) is benefiting from strong freight market conditions, even though cost headwinds remain. The company’s measures to reward its shareholders through dividends and share buybacks are encouraging.
With robust freight demand, LSTR’s primary segment — truck transportation — is benefiting from strong demand in the van truckload business. Higher truck rates, owing to tight truck capacity, are also boosting performance.
Despite substantial impact on two of Landstar’s agencies due to the Russia-Ukraine war, the company has been ahead of its first-quarter 2022 guidance issued in January. Through the first eight weeks of the ongoing quarter, LSTR’s revenue per load on loads hauled via truck increased 27% year over year, compared with the first-quarter guided range of an increase of 14-17%. The number of loads hauled via truck surged 24% year over year in the first eight weeks of the current quarter, ahead of the forecast of a 12-14% increase.
Given this healthy trend, Landstar expects revenues for the first quarter to exceed the high end of the guided range of $1.70-$1.75 billion in the mid-single-digit percentage range, even if it assumes “complete disruption of the Ukrainian-based operations of these two agencies through the remainder of the first quarter." Earnings per share for the period is also anticipated to exceed the high end of the guided range of $2.70-$2.80 in the low-double-digit percentage range.
Landstar has a track record of consistently rewarding its shareholders. In December 2021, the company expanded its stock repurchase program, by dint of which it can now purchase 3,000,000 shares. By boosting the repurchase plan, the company can purchase 1,912,824 shares of its common stock in addition to the 1,087,176 shares remaining under the prior share buyback program. Previously, in July 2021, LSTR increased its quarterly dividend by 19% to 25 cents per share (annualized $1).
In light of the abovementioned positives, we believe investors should hold on to the Landstar stock now, as suggested by its Zacks Rank #3 (Hold). Healthy freight demand is expected to continue to drive growth of the company.
Key Picks
Some better-ranked stocks in the broader Transportation sector are as follows:
USA Truck carries a Zacks Rank #1 (Strong Buy). The company’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters (in line in one), the average beat being 64.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of USA Truck have rallied more than 56% in the past six months.
GATX Corporation (GATX - Free Report) carries a Zacks Rank #2 (Buy). The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 27.7%.
Shares of GATX have rallied more than 31% in the past six months.
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Key Reasons to Hold on to the Landstar (LSTR) Stock For Now
Landstar System (LSTR - Free Report) is benefiting from strong freight market conditions, even though cost headwinds remain. The company’s measures to reward its shareholders through dividends and share buybacks are encouraging.
With robust freight demand, LSTR’s primary segment — truck transportation — is benefiting from strong demand in the van truckload business. Higher truck rates, owing to tight truck capacity, are also boosting performance.
Despite substantial impact on two of Landstar’s agencies due to the Russia-Ukraine war, the company has been ahead of its first-quarter 2022 guidance issued in January. Through the first eight weeks of the ongoing quarter, LSTR’s revenue per load on loads hauled via truck increased 27% year over year, compared with the first-quarter guided range of an increase of 14-17%. The number of loads hauled via truck surged 24% year over year in the first eight weeks of the current quarter, ahead of the forecast of a 12-14% increase.
Landstar System, Inc. Price and Consensus
Landstar System, Inc. price-consensus-chart | Landstar System, Inc. Quote
Given this healthy trend, Landstar expects revenues for the first quarter to exceed the high end of the guided range of $1.70-$1.75 billion in the mid-single-digit percentage range, even if it assumes “complete disruption of the Ukrainian-based operations of these two agencies through the remainder of the first quarter." Earnings per share for the period is also anticipated to exceed the high end of the guided range of $2.70-$2.80 in the low-double-digit percentage range.
Landstar has a track record of consistently rewarding its shareholders. In December 2021, the company expanded its stock repurchase program, by dint of which it can now purchase 3,000,000 shares. By boosting the repurchase plan, the company can purchase 1,912,824 shares of its common stock in addition to the 1,087,176 shares remaining under the prior share buyback program. Previously, in July 2021, LSTR increased its quarterly dividend by 19% to 25 cents per share (annualized $1).
In light of the abovementioned positives, we believe investors should hold on to the Landstar stock now, as suggested by its Zacks Rank #3 (Hold). Healthy freight demand is expected to continue to drive growth of the company.
Key Picks
Some better-ranked stocks in the broader Transportation sector are as follows:
USA Truck carries a Zacks Rank #1 (Strong Buy). The company’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters (in line in one), the average beat being 64.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of USA Truck have rallied more than 56% in the past six months.
GATX Corporation (GATX - Free Report) carries a Zacks Rank #2 (Buy). The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 27.7%.
Shares of GATX have rallied more than 31% in the past six months.