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Why Is Landstar (LSTR) Up 7.8% Since Last Earnings Report?

Zacks Equity Research
·3 mins read

It has been about a month since the last earnings report for Landstar System (LSTR). Shares have added about 7.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Landstar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Earnings Beat at Landstar in Q2

Landstar’s second-quarter 2020 earnings (excluding 35 cents from non-recurring items) of 98 cents per share beat the Zacks Consensus Estimate of 72 cents. However, the bottom line declined significantly year over year. Although revenues of $823.5 million surpassed the Zacks Consensus Estimate of $782.6 million, it plunged 21.2% year over year. Results were hurt by coronavirus-induced weak freight demand.

Detailed Statistics

Gross profit (revenues excluding the cost of purchased transportation and commissions to agents) came in at $113.1 million in the reported quarter, down 28.4% year over year.
Further, operating income fell 60.2% from the prior-year quarter’s figure to $32.18 million. Total costs and expenses (on a reported basis) declined 18% to $792.17 million.

Total revenues in the truck transportation segment — contributing 91.5% to the top line — amounted to $753.33 million, down 22.2% from the year-ago quarter’s figure. Within the truck transportation segment, truckload transportation revenues hauled via van equipment fell 20.2% to $483.02 million.  Also, truckload transportation revenues hauled via unsided/platform equipment declined 26.8% to $247.39 million.

Less-than-truckload revenues slipped 7.3% to $22.92 million. The overall second-quarter truck transportation revenue per load dropped 7.1% year over year.

Rail intermodal revenues of $23.19 million decreased 18.8% from the figure recorded in second-quarter 2019. Meanwhile, revenues in the ocean and air cargo carriers segment increased 8.6% year over year to $30.66 million. Other revenues declined 18.5% to $16.33 million.

Liquidity

At the end of the second quarter, Landstar had cash and cash equivalents of $245.47 million, compared with the $319.51 million recorded at the end of 2019. Additionally, long-term debt (excluding current maturities) totaled $60.15 million at the end of the second quarter, compared with $70.21 million at the end of 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 16.33% due to these changes.

VGM Scores

Currently, Landstar has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Landstar has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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Zacks Investment Research