Here's Why Investors Should Give Landstar Stock a Miss Now

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

Let’s delve deeper.

LSTR: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for second-quarter 2025 earnings has moved 20.1% south in the past 90 days. For the current year, the consensus mark for earnings has been revised downward by 19.3% 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 19.7% so far this year compared with the transportation-truck industry’s 17% decline.

LSTR Stock YTD Price Comparison

Weak Zacks Rank and Style Score: LSTR currently carries a Zacks Rank #5 (Strong 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 three of the last four quarters (outpaced the mark in the remaining quarter), delivering an average miss of 3.34%.

Earnings Expectations: Downbeat earnings expectations cast a shadow over a company’s prospects. For second-quarter 2025, LSTR’s earnings are expected to decline 19.5% year over year. For 2025, LSTR’s earnings are expected to decline 10.7% year over year.

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.

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-paying job mostly does not appeal to the younger generation.

The still-high inflation reading continues to hurt consumer sentiment and growth expectations. With labor and material costs showing no signs of letting off, the ability to pass these increases through to the consumer will determine the profitability of trucking companies like LSTR.

Bearish Industry Rank 

The industry to which LSTR belongs currently has a Zacks Industry Rank of 244 (out of 248 groups). Such a weak rank places the industry in the bottom 1% 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 Transportation sector may also consider Copa Holdings CPA and Ryanair RYAAY.

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

CPA has an expected earnings growth rate of 13.1% 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 5.5%. Shares of CPA have risen 16.5% year to date.

RYAAY currently sports a Zacks Rank #1.

The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average beat of 44.5%. Shares of RYAAY have rallied 15.6% year to date.

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

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