Here's Why Investors Should Give Landstar (LSTR) a Miss Now
Landstar System LSTR is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 3.4% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 14.9% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank and Style Score: Landstar currently carries a Zacks Rank #5 (Strong Sell). Moreover, the company’s current Momentum Style Score of D shows its short-term unattractiveness.
Unimpressive Price Performance: LSTR has lost 9.9% over the past three months compared with its industry’s 3.7% decline.
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Other Headwinds: Landstar is being hurt by weak freight conditions. Inflation-related woes have resulted in reduced consumer demand for goods. This, in turn, is affecting freight volumes.
Additionally, escalating operating expenses, primarily due to a rise in purchased transportation costs and fuel prices, pose a threat to the company's bottom line. Increasing expenses are putting pressure on the margins. Driver shortage continues to be a major challenge faced by the trucking industry.
Bearish Industry Rank: The industry, to which LSTR belongs, currently has a Zacks Industry Rank of 235 (of 250 plus groups). Such an unfavorable rank places it in the bottom 6% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Stocks to Consider
Investors interested in the broader Transportation sector may consider some better-ranked stocks like Air Canada ACDVF and SkyWest SKYW.
Air Canada currently sports a Zacks Rank #1 (Strong Buy). An uptick in passenger traffic is aiding ACDVF. Recently, management announced plans to launch a year-round route between Montreal and Madrid. You can see the complete list of today’s Zacks #1 Rank stocks here.
The service will commence in May of the following year as part of its expanded international summer 2024 flying schedule to cater to increased demand. The Zacks Consensus Estimate for current-year earnings has jumped 32.6% in the past 60 days.
SkyWest currently carries a Zacks Rank #2 (Buy). SKYW's fleet-modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for current-quarter earnings has surged 83.3% in the past 60 days.
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