Landstar System, Inc. (LSTR) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.

LSTR is being hurt by reduced demand for freight services and increased truck capacity. Due to the demand weakness, shipment volumes and rates are low. The top line has been suffering mainly due to the below-par performance of its key segment, namely, truck transportation. Revenues are likely to be weak in the future as well. LSTR expects first-quarter 2025 truckloads to decline in the range of 2-7% on a year-over-year basis. Truck revenue per load is expected to be down 2% to up 3% on a year-over-year basis.

The truck industry, of which Landstar is an integral part, has been persistently battling a driver shortage for several years. As old drivers are retiring, trucking companies are finding it difficult to find new drivers to take their place since low-esteem jobs mostly do not appeal to the younger generation.

Partly due to these headwinds, shares of LSTR have plunged 18.5% over the past year compared with the transportation-truck industry’s 37.6% decline.

One-Year LSTR Stock Price Comparison

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Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has moved 18.4% south in the past 90 days. For the current year, the consensus mark for earnings has been revised 14.8% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

Weak Zacks Rank and Style Score: LSTR currently carries a Zacks Rank #4 (Sell). The company’s current Value Score of D shows its unattractiveness.

Negative Earnings Surprise History: LSTR has a disappointing earnings surprise history. The company’s earnings lagged the Zacks Consensus Estimate in two of the last four quarters (outpaced the mark in the remaining two quarters), delivering an average miss of 0.65%.

Bearish Industry Rank 

The industry to which LSTR belongs currently has a Zacks Industry Rank of 171 (out of 248 groups). Such a weak rank places the industry in the bottom 31% of the Zacks industries. Studies have shown that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.

In fact, a robust stock in a weak industry is likely to underperform an ordinary stock in a strong group. Therefore, considering the industry’s performance becomes imperative.

Stocks to Consider

Investors interested in the Zacks Transportation sector may also considerSkyWest SKYW and Frontier Group ULCC.

SkyWest

SkyWest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SKYW has an expected earnings growth rate of 16% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 16.7%. Shares of SKYW have risen 9.1% over the past six months.

Frontier Group

Frontier Group flaunts a Zacks Rank of 1 at present.

ULCC has an expected earnings growth rate of more than 300% for the current year.

The company has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average surprise is 1.1%. Shares of ULCC have surged 43% in the past six months.

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SkyWest, Inc. (SKYW) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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