Landstar System, Inc. (NASDAQ:LSTR) last week reported its latest first-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues of US$928m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$1.04, missing estimates by 5.1%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the recent earnings report, the consensus from twelve analysts covering Landstar System is for revenues of US$3.49b in 2020, implying a chunky 12% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to tumble 24% to US$3.95 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.91b and earnings per share (EPS) of US$5.18 in 2020. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
The analysts made no major changes to their price target of US$101, suggesting the downgrades are not expected to have a long-term impact on Landstar System'svaluation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Landstar System at US$121 per share, while the most bearish prices it at US$73.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 12%, a significant reduction from annual growth of 7.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.6% annually for the foreseeable future. It's pretty clear that Landstar System's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$101, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Landstar System. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Landstar System going out to 2022, and you can see them free on our platform here..
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