Landstar’s 4Q Profit Outlook Tops Estimates; Street Sticks To Hold

Landstar System provided a 4Q outlook that topped Wall Street estimates fueled by stronger-than-expected quarterly results in the third quarter.

Landstar (LSTR) expects 4Q EPS to be in the range of $1.61-$1.71, higher than the consensus estimate of $1.45. The transportation services company forecasts 4Q revenues in the range of $1.15-1.20 billion, exceeding the Street consensus of $1.06 billion.

In the third quarter, the company’s earnings per share rose 19% to $1.61 year-over-year, topping the consensus estimate of $1.37. Further, its revenues of $1.09 billion jumped 7% year-over-year, surpassing analysts’ expectations of $1.02 billion. The company, which specializes in logistics and is focused on third-party logistics, said that the improvement in “number of loads and revenue per load on loads hauled via truck,” drove its top and bottom line.

Landstar CEO Jim Gattoni expects “the number of loads hauled via truck in the 2020 fourth quarter to be above the number of loads hauled by truck in the 2019 fourth quarter in a high single-digit percentage range.” Based on the current macroeconomic outlook, Gattoni expects “pricing to remain strong and relatively stable through the 2020 fourth quarter given current demand and assuming little change in the level of truck capacity available in the marketplace.” (See LSTR stock analysis on TipRanks).

Following the 3Q results, Oppenheimer analyst Scott Schneeberger maintained a Hold rating on the stock, saying that its “3Q20 exceeds increased expectations on progressively improving volume/price.”

Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 9 Holds, 1 Buy and 1 Sell. The average price target of $122.90 implies downside potential of about 3.5% to current levels. Shares gained by about 11.8% year-to-date.