Will Landstar (LSTR) Tide Over High Costs In Q4 Earnings?

Landstar System, Inc. (NASDAQ:LSTR) is scheduled to report fourth-quarter 2018 earnings numbers on Jan 30, after the market closes.

In the last reported quarter, the company delivered a positive earnings surprise of 1.9%. Quarterly revenues were also marginally above the Zacks Consensus Estimate. Moreover, both the top and the bottom line improved substantially year over year. Higher segmental revenues aided results.

Let’s see how things are shaping up for this earnings season.

Factors Likely at Play

The company’s fourth-quarter results are likely to get a boost from the upbeat freight scenario, spurring a rise in demand for its services. Revenues in the quarter to be reported are estimated in the range of $1.18-$1.23 billion, reflecting an increase of 12-17% from the fourth-quarter 2017. The Zacks Consensus Estimate for the same stands at $1.21 billion. Further, earnings per share are forecast between $1.56 and $1.62 in the final quarter of 2018 compared with $1.54 in the fourth quarter of 2017.

Each of the segments is anticipated to perform well in the impending quarterly release and thus aid the top line. For instance, the Zacks Consensus Estimate for fourth-quarter Rail intermodal revenues stands at $34.5 million, higher than $34.44 million reported in the third quarter of 2018. The consensus mark for revenues at the Ocean and air cargo carriers segment is pegged at $32.27 million, above $31.21 million reported in the previous quarter.

Moreover, Landstar anticipates fourth-quarter truck revenues per load to increase in an upper single-digit percentage range compared with the fourth quarter of 2017. Additionally, number of loads hauled via truck is expected to expand approximately 8-10% year over year in the soon-to-be-reported quarter.

However, the company’s high operating expenses are concerning and might affect bottom-line growth in the said quarter.

Earnings Whispers

Our proven model does not conclusively show that Landstar is likely to beat estimates this earnings season. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.

Earnings ESP: Landstar has an Earnings ESP of -1.34%. This is because the Most Accurate Estimate is pegged at $1.56, lower than the Zacks Consensus Estimate of $1.58. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Landstar carries a Zacks Rank #3, which increases the predictive power of ESP. However, a company needs to have a positive ESP as well to be confident about a likely earnings surprise. Therefore, this combination leaves surprise prediction inconclusive.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Expeditors International of Washington, Inc. (NASDAQ:EXPD) , ArcBest Corporation (NASDAQ:ARCB) and Copa Holdings, S.A. (NYSE:CPA) as these possess the perfect mix of elements to beat on earnings this reporting cycle.

Expeditors has an Earnings ESP of +0.39% and a Zacks Rank of 1. The company will release fourth-quarter 2018 results on Feb 19. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcBest has an Earnings ESP of +4.78% and a Zacks Rank #2. The company will release fourth-quarter 2018 results on Jan 30.

Copa Holdings has an Earnings ESP of +6.93% and a Zacks Rank of 2. The company will release fourth-quarter 2018 results on Feb 13.

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