On April 2, 2025, Landstar System, Inc. (LSTR) issued up to date first-quarter 2025 steering, citing points associated to truckload quantity, truck income per load, variable contribution and insurance coverage and claims bills. Moreover, a provide chain fraud case has come to mild, which is prone to negatively affect LSTR’s earnings.
Given this backdrop, the query that naturally arises is: Ought to traders purchase, maintain, or promote LSTR inventory now? A extra in-depth evaluation is required to make that willpower. Earlier than diving into LSTR’s funding prospects, let’s take a look at its monetary numbers.
LSTR’s Tweaked Q1 Steering
Landstar lowered its first-quarter 2025 earnings per share steering to the vary of 90-95 cents from the beforehand guided vary of $1.05-$1.25 per share. The draw back may be attributed to the insurance coverage and claims prices, which LSTR anticipates to be considerably elevated within the first quarter of 2025 as a result of growth of cargo theft and truck accident claims.
Moreover, over the past fiscal week of the primary quarter of 2025, LSTR recognized a provide chain fraud case that now stays below investigation and doesn’t contain LSTR’s core North American truckload companies. Regardless of being within the early phases of the investigation, LSTR expects this fraud case to harm its first-quarter 2025 earnings per share within the vary of 35 to 50 cents, primarily associated to an impairment of a commerce accounts receivable recorded on LSTR’s Dec. 28, 2024 steadiness sheet (earlier than bearing in mind any potential insurance coverage or different recoveries).
Coming to the highest line half, LSTR now anticipates its first-quarter 2025 revenues to be at or close to the mid-point of the beforehand guided vary of $1.075-$1.175 billion. The corporate witnessed a stronger-than-typical February by way of the variety of hundreds hauled by truck. This efficiency greater than offset the softness skilled on hundreds hauled by way of truck on the finish of January, owing to extreme winter climate throughout the nation and the wildfires in California.
In the course of the first eight weeks of the primary quarter of 2025, LSTR witnessed a 4% year-over-year decline within the variety of hundreds hauled by way of truck. The draw back was owing to decreases of 6% and 5% in hundreds hauled by way of van tools and unsided/platform tools, respectively, partially offset by a 26% improve in different truck transportation loadings.
We want to remind traders that LSTR is slated to launch its first-quarter 2025 earnings outcomes on April 29, 2025, after the market shut.
LSTR Inventory Worth Plunges
LSTR’s disappointing value efficiency just isn’t restricted to post-first-quarter 2025 steering revision.
Shares of Landstar inventory have plunged 19.4% to this point this 12 months in contrast with the transportation-truck industry’s 9.9% decline. Nonetheless, LSTR’s value efficiency compares favorably with that of business gamers reminiscent of J.B. Hunt Transport Companies JBHT and Knight-Swift Transportation Holdings Inc. KNX inside the similar timeframe.
LSTR Inventory YTD Worth Comparability
Picture Supply: Zacks Funding Analysis
Moreover, LSTR inventory reached a brand new 52-week low of $137.49 within the buying and selling session on April 3, 2025, earlier than closing a tad increased at $138.63.
What Do Earnings Estimates Say for LSTR?
Up to now 60 days, the Zacks Consensus Estimate for LSTR’s first-quarter and second-quarter 2025 earnings and full-year 2025 earnings have moved south.
Picture Supply: Zacks Funding Analysis
Valuation Image for LSTR Inventory
From a valuation perspective, LSTR has been buying and selling at a premium in contrast with the business.
The inventory has a ahead 12-month P/E-F12M of twenty-two.09X in contrast with 20.13X for the business over the previous 5 years. The corporate’s ahead 12-month P/E-F12M ratio can also be above the median degree of 21.75X over the previous 5 years. These elements point out that the inventory’s valuation is unattractive.
LSTR P/E Ratio (Ahead 12 Months) Vs. Business
Picture Supply: Zacks Funding Analysis
LSTR has a Value Score of D.
Furthermore, LSTR is pricey than different trucking shares, reminiscent of J.B. Hunt Transport Companies and Knight-Swift. J.B. Hunt Transport Companies and Knight-Swift have ahead 12-month P/E-F12M of 20.19X and 16.01X, respectively.
Time to Get Rid of LSTR
It’s fairly clear that LSTR inventory is presently unattractively valued. Furthermore, increased insurance coverage and claims bills and a provide chain fraud case are hurting its first-quarter 2025 earnings expectations. Decreased demand for freight companies and elevated truck capability proceed to hamper the corporate’s progress prospects. The tariff-related uncertainty additional clouds LSTR’s outlook.
We consider that the negatives surrounding LSTR inventory outweigh its efforts to develop its heavy haul companies along with the cross-border transportation with Mexico, its strong steadiness sheet and constant efforts in rewarding shareholders by way of dividend funds and share buybacks. So, the inventory seems to be a dangerous guess for traders. The inventory’s present Zacks Rank #5 (Robust Promote) justifies our evaluation.
You may see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
Knight-Swift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report
Landstar System, Inc. (LSTR) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
