Back to top

Image: Bigstock

Here's Why Investors Should Hold Landstar (LSTR) Stock Now

Read MoreHide Full Article

Landstar System (LSTR - Free Report) is benefiting from itsconsistent initiatives to reward shareholders through dividends and share repurchases. During 2021, it rewarded its shareholders through dividends of $111.96 million and repurchased shares worth $122.72 million. In 2022, the company paid dividends of $115.67 million and repurchased shares worth $285.98 million. In 2023, it paid dividends of $117.13 million and repurchased shares worth $53.91 million. Such shareholder-friendly moves instill investor confidence and positively impact the company's bottom line.

On the flip side, LSTR is being hurt by weak freight conditions. 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. We expect 2024 truck transportation revenues to decline 4.1% from 2023's actuals. Weakness in overall volumes due to headwinds like weak freight conditions, supply-chain woes and slower network velocity are hurting the top line.

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.

Zacks Rank and Stocks to Consider

Currently, Landstar currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Transportation sector are GATX Corporation (GATX - Free Report) and SkyWest, Inc. (SKYW - Free Report) . Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GATX has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.

The Zacks Consensus Estimate for 2024 earnings has been revised 8.9% upward over the past 90 days. GATX has an expected earnings growth rate of 6.51% for 2024. Shares of GATX have gained 26% in the past year.

SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 27.3% over the past 90 days. Shares of SKYW have surged 242.3% in the past year.

SKYW has an expected earnings growth rate of more than 100% for 2024. SKYW delivered a trailing four-quarter earnings surprise of 128.02%, on average.

Published in