Analyst Garrett Holland from Robert W. Baird maintained a Hold rating on Landstar System (LSTR – Research Report) and keeping the price target at $200.00.
Garrett Holland has given his Hold rating due to a combination of factors surrounding Landstar System’s recent performance and future outlook. The company’s earnings per share (EPS) for Q1 2024 surpassed the reduced market expectations, reflecting stronger revenue from truck transportation and a higher variable contribution margin than anticipated. While the EPS demonstrated resilience, there were concerns including the continued decline in the number of independent truckload contractors (BCOs) and a significant quarter-over-quarter deterioration in the operating margin as a percentage of net revenue. This paints a mixed picture of Landstar’s current financial health and raises questions about its capacity to manage cyclical pressures and cost inflation.
Furthermore, Holland likely awaits further clarity from the upcoming quarterly guidance, which will provide additional insight into Landstar’s strategies to counteract the negative trends, such as the attrition of BCOs and the challenges posed by sustained cost inflation. The performance of key financial metrics, such as the loads hauled via truck and revenue on these loads, although better than the previous quarter, still show year-over-year declines. The anticipation of how management plans to address these concerns and their ability to reverse the negative trends will be crucial in reassessing the company’s stock rating in the future, justifying the current Hold position.
Holland covers the Industrials sector, focusing on stocks such as Norfolk Southern, United Parcel, and Forward Air. According to TipRanks, Holland has an average return of 1.1% and a 46.21% success rate on recommended stocks.
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Landstar System (LSTR) Company Description:
Landstar System, Inc. engages in the provision of transportation management solutions. It operates through the following segments: Transportation Logistics and Insurance. The Transportation Logistics segment offers transportation services including truckload and less-than-truckload transportation, rail intermodal, air and ocean cargo, project cargo, and customs brokerage. The Insurance segment includes risk and claims management services. The company was founded in January 1991 and is headquartered in Jacksonville, FL.
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