Truist has revised its price target for Landstar System (LSTR, Financial), reducing it from $150 to $135, while maintaining a Hold rating on the stock. This adjustment is part of a comprehensive analysis focused on the Transportation & Logistics sector, prompted by a more subdued macroeconomic environment.
The firm highlights that the sector has effectively been navigating a "freight recession" for over 30 months. Despite this, industry metrics like the overall tonnage index have remained relatively stable, a trend expected to continue through 2024 and into 2025. This stability has been supported by ongoing growth in U.S. GDP, retail sales, and the expansion of e-commerce.
Nevertheless, while the demand for freight movement has persisted, the sector is experiencing significant pricing pressures, particularly within the truckload market. This pricing dynamic is a key factor influencing Truist's revised outlook and valuation for Landstar System.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 11 analysts, the average target price for Landstar System Inc (LSTR, Financial) is $151.31 with a high estimate of $176.00 and a low estimate of $120.00. The average target implies an upside of 9.43% from the current price of $138.27. More detailed estimate data can be found on the Landstar System Inc (LSTR) Forecast page.
Based on the consensus recommendation from 16 brokerage firms, Landstar System Inc's (LSTR, Financial) average brokerage recommendation is currently 3.1, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Landstar System Inc (LSTR, Financial) in one year is $147.02, suggesting a upside of 6.33% from the current price of $138.27. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Landstar System Inc (LSTR) Summary page.
LSTR Key Business Developments
Release Date: January 29, 2025
- Heavy Haul Revenue: $498 million for the 2024 fiscal year, with a 9% increase in revenue per load and a 3% increase in volume.
- Truck Revenue Per Load: Increased 3.1% in Q4 2024 compared to Q4 2023.
- Heavy Haul Revenue Growth: 24% year-over-year increase in Q4 2024.
- Non-Truck Transportation Revenue: Increased by 20% or $18 million in Q4 2024 compared to Q4 2023.
- Gross Profit: $109.4 million in Q4 2024, down from $124.6 million in Q4 2023.
- Gross Profit Margin: 9% in Q4 2024, compared to 10.3% in Q4 2023.
- Variable Contribution Margin: 13.8% of revenue in Q4 2024, compared to 14.8% in Q4 2023.
- Insurance and Claims Costs: $30.1 million in Q4 2024, up from $27.3 million in Q4 2023.
- Cash and Short-term Investments: $567 million at the end of Q4 2024.
- Cash Flow from Operations: $287 million for the 2024 fiscal year.
- Capital Expenditures: $31 million for the 2024 fiscal year.
- Share Repurchases: Approximately $81 million during the 2024 fiscal year.
- Dividends Paid: $120 million during the 2024 fiscal year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Landstar System Inc (LSTR, Financial) achieved record revenue performance in its heavy haul service offering, generating approximately $498 million in 2024.
- The company reported a 3.1% increase in overall truck revenue per load in the fourth quarter of 2024 compared to the same period in 2023.
- Landstar System Inc (LSTR) maintained a strong balance sheet with cash and short-term investments of $567 million at the end of the quarter.
- The company declared a $2 per share special dividend and repurchased approximately 452,000 shares of common stock during the 2024 fiscal year.
- Landstar System Inc (LSTR) reported an improvement in safety performance, with an accident frequency rate of 0.59 DOT reportable accidents per million miles, a 2% improvement compared to 2023.
Negative Points
- The freight environment in the fourth quarter of 2024 was characterized by relatively soft demand and readily available truck capacity, impacting overall performance.
- Landstar System Inc (LSTR) experienced a 3.4% decline in the number of loads hauled via truck in the fourth quarter of 2024 compared to the same period in 2023.
- The company's BCO truck count decreased by approximately 10% year-over-year, reflecting challenges in retaining and recruiting independent operators.
- Insurance and claims costs increased to $30.1 million in the fourth quarter of 2024, up from $27.3 million in the same period in 2023, due to increased severity on cargo claims.
- Variable contribution margin decreased to 13.8% of revenue in the fourth quarter of 2024, compared to 14.8% in the same period last year, primarily due to increased rates paid to truck brokerage carriers.
