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

Let’s delve deeper.

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 to 14.8% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

Dim Price Performance:  The company’s price trend reveals that its shares have lost 13.9% over the past year compared with the transportation-truck industry’s 33.8% decline.

One-Year LSTR Stock Price Comparison

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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%.

Other Headwinds: 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 the low-esteem job mostly do not appeal to the younger generation.

Bearish Industry Rank 

The industry to which LSTR belongs currently has a Zacks Industry Rank of 207 (out of 248 groups). Such a weak rank places the industry in the bottom 16% 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 consider United Airlines UAL and SkyWest SKYW. Each stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

United Airlines

United Airlines has an expected earnings growth rate of 21.11% for the current year. The Zacks Consensus Estimate for UAL’s 2025 earnings per share has been revised 10.6% upward in the past 60 days.

The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 22.93%. Shares of UAL have surged 93.3% in the past year.

SkyWest

SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW’s track record of successfully meeting the requirements of each of its airline heavyweight partners bodes well for the company. Revenues from flying agreements (which account for the bulk of the top line) are impressive owing to SKYW’s above ability. Owing to an uptick in air travel demand, passenger volumes have been upbeat and are likely to increase going forward as well. This is likely to keep SKYW's top line in good shape.

SKYW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 16.71%. The Zacks Consensus Estimate for 2025 earnings per share has been revised 7.9% upward in the past 60 days.

Shares of SKYW have surged 32.1% in the past year. SKYW has an expected earnings growth rate of 15.96% for the current year.

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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report

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

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