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Why Is Landstar (LSTR) Up 10.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Landstar System (LSTR - Free Report) . Shares have added about 10.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Landstar due for a pullback? 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 catalysts.

Earnings Miss at Landstar in Q1

Landstar System’s first-quarter 2020 earnings of $1.04 per share missed the Zacks Consensus Estimate by 8 cents. Moreover, the bottom line declined 34.2% on a year-over-year basis. Revenues amounted to $927.6 million, which missed the Zacks Consensus Estimate of $936.7 million. The top line dropped 10.2% on a year-over-year basis. Notably, lower truck volumes amid coronavirus pandemic, dented truck revenues and impacted quarterly results.

Detailed Statistics

Gross profit (revenues excluding the cost of purchased transportation and commissions to agents) came in at $142.9 million in the reported quarter, down 8.2% year over year.

Further, operating income declined 33.2% from the prior-year quarter’s figure to $54 million. Total costs and expenses (on a reported basis) declined to $874.7 million from the $953.2 billion incurred in the prior-year quarter.

Total revenues in the truck transportation segment — contributing 92% to the top line — amounted to $854.6 million, down 10.3% from the year-ago quarter’s figure. Within the truck transportation segment, truckload transportation revenues hauled via van equipment in the reported quarter fell 12% to $545.3 million. Also, truckload transportation revenues hauled via unsided/platform equipment declined 7.9% to $286.3 million.

Less-than-truckload revenues dropped 2% to $22.94 million. The overall first-quarter truck revenue per load dropped 5.6% year over year to $474.3 million. Intermodal revenues of $28.13 million fell 8.3% from the figure recorded in the first quarter of 2019. Revenues in the ocean and air cargo carriers segment fell 13.3% from the year-ago quarter to $26.6 million. Moreover, other revenues declined to $18.3 million.

Liquidity

Landstar’s cash and cash equivalents were $177.22 million compared with the $319.51 million recorded at the end of 2019. Additionally, long-term debt (excluding current maturities) totaled $61.97 million compared with $70.21 million at the end of 2019.

The company’s Board of Directors declared a quarterly dividend of 18.5 cents (annualized 74 cents) per share payable on May 29, 2020 to shareholders as on May 7. In first-quarter 2020, Landstar rewarded its shareholders with $86.3 million through dividend payouts.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -34.49% due to these changes.

VGM Scores

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. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.

Outlook

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.


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