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Landstar (LSTR) Up 11.9% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Landstar System (LSTR). Shares have added about 11.9% 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 drivers.

Earnings In Line at Landstar in Q3

Landstar System’s third-quarter 2022 earnings of $2.76 per share met the Zacks Consensus Estimate. The bottom line surged 7% year over year. The reported figure lies within the guided range of $2.75-$2.85.

Revenues of $1,816.8 million surpassed the Zacks Consensus Estimate of $1,790.4 million. The top line soared 5% year over year. The reported figure lies within the guided range of $1.80-$1.85 billion.

Gross profit came in at $185.72 million in the reported quarter, down 1.8% year over year. Operating income surged 1.6% from the prior-year quarter’s figure to $133.49 million. Total costs and expenses (on a reported basis) increased 4.9% to $1.68 billion.

Total revenues in the truck transportation segment — contributing to 88% of the top line — amounted to $1.59 billion, up 1.1% from the year-ago quarter’s figure. Rail intermodal revenues of $27.65 million decreased 37.8% from the figure recorded in third-quarter 2021.

Revenues in the ocean and air-cargo carrier segments skyrocketed 95.3% year over year to $164.25 million. Other revenues increased 1.9% to $25.46 million.

Liquidity, Dividends & Buyback

At the end of the third quarter of 2022, Landstar had cash and cash equivalents of $177.79 million compared with $78.22 million recorded at the end of June 2022. Additionally, long-term debt (excluding current maturities) totaled $72.09 million at the end of the September quarter compared with $73.99 million at the end of June 2022.

During the reported quarter, Landstar purchased almost 504,000 shares for $73.3 million.

Q4 Outlook

Landstar anticipates fourth-quarter 2022 revenues in the range of $1.775-$1.825 billion. Earnings per share for the December quarter are estimated to be in the band of $2.60-$2.70. The Zacks Consensus Estimate for the same is currently pegged at $2.51 per share, which lies below the guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Landstar has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Landstar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Landstar is part of the Zacks Transportation - Truck industry. Over the past month, JB Hunt (JBHT), a stock from the same industry, has gained 11.7%. The company reported its results for the quarter ended September 2022 more than a month ago.

JB Hunt reported revenues of $3.84 billion in the last reported quarter, representing a year-over-year change of +22.1%. EPS of $2.57 for the same period compares with $1.88 a year ago.

JB Hunt is expected to post earnings of $2.52 per share for the current quarter, representing a year-over-year change of +10.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.6%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for JB Hunt. Also, the stock has a VGM Score of A.


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