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Can Landstar (LSTR) Run Higher on Rising Earnings Estimates?

Zacks Equity Research
·2 mins read

Landstar System (LSTR) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.

Analysts' growing optimism on the earnings prospects of this freight shipper and warehouser is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Landstar, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The earnings estimate of $1.12 per share for the current quarter represents a change of -17.04% from the number reported a year ago.

Over the last 30 days, six estimates have moved higher for Landstar compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 16.5%.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $4.02 per share represents a change of -29.72% from the year-ago number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Landstar. Over the past month, six estimates have moved higher compared to two negative revisions, helping the consensus estimate increase 10.3%.

Favorable Zacks Rank

The promising estimate revisions have helped Landstar earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for Landstar have attracted decent investments and pushed the stock 9.2% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.

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Zacks Investment Research