We recently issued an updated research report on Landstar System LSTR. Depressed truck pricing coupled with freight demand weakness caused the stock to underperform its industry over the past year. The stock has rallied 15.7% in the past year compared withi its industry’s rise of 42.7%.
Let’s dig deeper to unearth the reasons for this underperformance.
The truck transportation segment is Landstar's primary revenue generating unit. However, the same has been performing disastrously for quite some time due to lower truck volumes and unfavorable pricing. Consequently, Landstar's top line declined 10.2% in the first quarter of 2020, mainly due to the lacklustre performance of its truck transportation segment. Notably, revenues at the segment dropped 12% and 10.3%, respectively, in 2019 and in first-quarter 2020.
Apart from truck transportation, the rail intermodal segment is delivering a dismal performance. As a result, revenues in the same deteriorated 8.3% in 2019. The segment performed disappointingly in first-quarter 2020 as well. With this key segment persistently reporting below-par revenues, shares of the company might take a huge hit.
Also, the fact that the Zacks Consensus Estimate for current-year earnings has been revised 25.9% downward over the past 60 days is reflective of the negative sentiment surrounding this Zacks Rank #5 (Strong Sell) stock.
In fact, the entire trucking industry, which also includes Zacks Rank #3 (Hold) stocks like Knight Swift Transportation Holdings KNX, Old Dominion Freight Line ODFL and J.B. Hunt Transportation JBHT, is plagued by driver crisis, which is hampering business operations. Since Landstar’s majority revenues are generated from trucking, this is a huge challenge for the company.
You can 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
KnightSwift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report
Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
Landstar System, Inc. (LSTR) : Free Stock Analysis Report
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