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Landstar Continues to Grapple With Freight Market Weakness
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Key Takeaways
LSTR faces low volumes and rates due to reduced freight demand and surplus truck capacity.
Persistent inflation and rising labor and material costs threaten future profitability.
LSTR stock is down 21.1% YTD, underperforming the transportation-truck industry's 18% drop.
Landstar System, Inc. (LSTR - Free Report) is currently facing 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. Due to the demand weakness, 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 in the future as well.
The still-high inflation reading continues to hurt consumer sentiment and growth expectations. With labor and material costs showing no signs of letting up, the ability to pass these increases through to the consumer will determine the profitability of trucking companies like LSTR.
The truck industry, of which Landstar is an integral part, has been persistently battling a driver shortage for several years. As old drivers are retiring, trucking companies are finding it difficult to find new drivers to take their place since the low-esteem job mostly doesn’t appeal to the younger generation.
Partly due to these headwinds, shares of LSTR have plunged 21.1% so far this year compared with the transportation-truck industry’s 18% decline.
LSTR Stock YTD Price Comparison
Image Source: Zacks Investment Research
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for second-quarter 2025 earnings has moved 14.8% south in the past 60 days. For the current year, the consensus mark for earnings has been revised to 10.4% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Image Source: Zacks Investment Research
Weak Zacks Rank and Style Score: LSTR currently carries a Zacks Rank #5 (Strong Sell). The company’s current Value Score of D shows its unattractiveness.
Negative Earnings Surprise History: LSTR has a disappointing earnings surprise history. The company’s earnings lagged the Zacks Consensus Estimate in three of the last four quarters (outpaced the mark in the remaining quarter), delivering an average miss of 3.34%.
Earnings Expectations: Downbeat earnings expectations cast a shadow over a company’s prospects. For second-quarter 2025, LSTR’s earnings are expected to decline 22.3% year over year. For 2025, LSTR’s earnings are expected to decline 11.3% year over year.
Bearish Industry Rank
The industry to which LSTR belongs currently has a Zacks Industry Rank of 244 (out of 248 groups). Such a weak rank places the industry in the bottom 1% of the Zacks industries. Studies have shown that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, a robust stock in a weak industry is likely to underperform an ordinary stock in a strong industry. Therefore, considering the industry’s performance becomes imperative.
CPA has an expected earnings growth rate of 14.3% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 5.5%. Shares of CPA have risen 24.2% year to date.
SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW is the holding company for SkyWest Airlines, SkyWest Charter and SkyWest Leasing, an aircraft leasing company. SKYW currently carries a Zacks Rank of 2 (Buy).
SKYW has an impressive earnings surprise track record, having surpassed the Zacks Consensus Estimate in each of the last four quarters. The average beat was 17.1%. The Zacks Consensus Estimate for current and next-year earnings has been revised upward over the past 60 days.
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Landstar Continues to Grapple With Freight Market Weakness
Key Takeaways
Landstar System, Inc. (LSTR - Free Report) is currently facing 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. Due to the demand weakness, 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 in the future as well.
The still-high inflation reading continues to hurt consumer sentiment and growth expectations. With labor and material costs showing no signs of letting up, the ability to pass these increases through to the consumer will determine the profitability of trucking companies like LSTR.
The truck industry, of which Landstar is an integral part, has been persistently battling a driver shortage for several years. As old drivers are retiring, trucking companies are finding it difficult to find new drivers to take their place since the low-esteem job mostly doesn’t appeal to the younger generation.
Partly due to these headwinds, shares of LSTR have plunged 21.1% so far this year compared with the transportation-truck industry’s 18% decline.
LSTR Stock YTD Price Comparison
Image Source: Zacks Investment Research
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for second-quarter 2025 earnings has moved 14.8% south in the past 60 days. For the current year, the consensus mark for earnings has been revised to 10.4% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Image Source: Zacks Investment Research
Weak Zacks Rank and Style Score: LSTR currently carries a Zacks Rank #5 (Strong Sell). The company’s current Value Score of D shows its unattractiveness.
Negative Earnings Surprise History: LSTR has a disappointing earnings surprise history. The company’s earnings lagged the Zacks Consensus Estimate in three of the last four quarters (outpaced the mark in the remaining quarter), delivering an average miss of 3.34%.
Earnings Expectations: Downbeat earnings expectations cast a shadow over a company’s prospects. For second-quarter 2025, LSTR’s earnings are expected to decline 22.3% year over year. For 2025, LSTR’s earnings are expected to decline 11.3% year over year.
Bearish Industry Rank
The industry to which LSTR belongs currently has a Zacks Industry Rank of 244 (out of 248 groups). Such a weak rank places the industry in the bottom 1% of the Zacks industries. Studies have shown that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, a robust stock in a weak industry is likely to underperform an ordinary stock in a strong industry. Therefore, considering the industry’s performance becomes imperative.
Stocks to Consider
Investors interested in the Transportation sector may also consider Copa Holdings (CPA - Free Report) and SkyWest, Inc. (SKYW - Free Report) ).
CPA currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CPA has an expected earnings growth rate of 14.3% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 5.5%. Shares of CPA have risen 24.2% year to date.
SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW is the holding company for SkyWest Airlines, SkyWest Charter and SkyWest Leasing, an aircraft leasing company. SKYW currently carries a Zacks Rank of 2 (Buy).
SKYW has an impressive earnings surprise track record, having surpassed the Zacks Consensus Estimate in each of the last four quarters. The average beat was 17.1%. The Zacks Consensus Estimate for current and next-year earnings has been revised upward over the past 60 days.