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Landstar System (LSTR) Stock Up 17% in 9 Months: Here's Why

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Stocks in the trucking industry are being aided by the fact that the U.S. economy is on a solid footing. Moreover, the trucking industry is currently facing capacity crunch. A healthy labor market with unemployment rate at its lowest in 49 years has resulted in severe shortage of drivers. This has raised the price for truckers.

One of the star performers in the trucking space is Landstar System, Inc. (LSTR - Free Report) . The stock has outperformed its industry in the first nine months of 2018. Shares of Landstar System have gained 17.2% compared with the industry’s 5.6% rally.

9-Month Price Performance


The company is being aided by the upbeat freight scenario in the United States which has led to an increase in demand for its services. Owing to this tailwind, it performed impressively during the first half of the year. First-half revenues surged 35% year over year owing to 12% addition to the number of loads hauled and a substantial rise in revenue per load across all modes. We expect the company to continue performing well in the third quarter of 2018 on the back of higher revenues. Detailed results will be out on Oct 24.

Apart from Landstar, investors interested in the trucking space will await third-quarter earnings reports from the likes of ArcBest Corporation (ARCB - Free Report) and Old Dominion Freight Line, Inc. (ODFL - Free Report) on Oct 24 and Oct 25 respectively. In fact, a trucking company, J.B. Hunt Transport Services, Inc. (JBHT - Free Report)     has already delivered better-than-expected third-quarter revenues as well as earnings per share.

Coming back to Landstar, its efforts to reward shareholders through dividends and share buybacks are commendable as well. The company hiked its dividend twice so far this year. In January, it raised its dividend by 50% to 15 cents per share. The same was further increased to 16.5 cents in July, reflecting a hike of 10%. With regard to buyback, the company currently has 2 million shares to be bought back under the existing share repurchase program. Landstar’s asset-light business model is also a positive.

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