A month has gone by since the last earnings report for Landstar System (LSTR). Shares have lost about 8% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Landstar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Earnings Miss at Landstar in Q4
Landstar's earnings of earnings of $1.27 per share missed the Zacks Consensus Estimate by 14 cents. Moreover, the bottom line declined 24.4% on a year-over-year basis, mainly due to lower revenues. Notably, revenues dipped 15.9% on a year-over-year basis to $994.9 million.
The top-line figure, however, surpassed the Zacks Consensus Estimate of $992.5 million. Lower truck volumes and unfavorable pricing dented truck revenues, mainly due to unfavorable market conditions, thereby hurting results. Gross profit (revenues excluding the cost of purchased transportation and commissions to agents) came in at $148.68 million in the reported quarter, down 12% year over year.
Further, operating margin (operating income divided by gross profit) dipped to 44.7% from the prior year’s 51%. Total costs and expenses (on a reported basis) declined to $929.7 million from the $1.09 billion incurred in the prior-year period.
Total revenues in the truck transportation segment — accounting for bulk (91.7%) of the top line — were $911.8 million, down 15.4%. Within the truck transportation segment, truckload transportation revenue hauled via van equipment in the reported quarter fell 18.9% to $571.77 million. Also, truckload transportation revenue hauled via unsided/platform equipment decreased 9.1% to $315.2 million.
Less-than-truckload revenues went down 4.7% to $24.85 million. The overall fourth-quarter truck revenue per load too dropped 9.2% on a year-over-year basis.
Rail intermodal revenues of $30.75 million fell 6.7%. Moreover, revenues in the ocean and air cargo carriers segment plunged 37.9% to $32.22 million. Meanwhile, other revenues increased to $20.1 million.
At the end of 2019, the company's cash and cash equivalents were $319.51 million compared with the $199.74 million recorded at the end of December 2018. Additionally, long-term debt (excluding current maturities) totaled $70.21 million compared with $84.86 million at the end of 2018.
The company expects revenues between $915 million and $965 million for the March-end quarter. Management expects current-quarter earnings per share in the $1.10-$1.20 range (excluding the resolution of a fatal accident that occurred in January).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -15.86% due to these changes.
At this time, Landstar has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Landstar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.