Landstar (LSTR)

Freight delivery company Landstar (NASDAQ:LSTR) fell short of the markets revenue expectations in Q4 CY2025, with sales falling 3.2% year on year to $1.17 billion. Its GAAP profit of $0.70 per share was 29.1% below analysts’ consensus estimates.

Company Overview

Covering billions of miles throughout North America, Landstar (NASDAQ:LSTR) is a transportation company specializing in freight and last-mile delivery services.

The growth of e-commerce and global trade continues to drive demand for shipping services, especially last-mile delivery, presenting opportunities for ground transportation companies. The industry continues to invest in data, analytics, and autonomous fleets to optimize efficiency and find the most cost-effective routes. Despite the essential services this industry provides, ground transportation companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins.

Competitors offering similar products include J.B. Hunt (NASDAQ:JBHT), Old Dominion (NASDAQ:ODFL), and Knight-Swift Transportation (NYSE:SWFT).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Landstar’s 2.8% annualized revenue growth over the last five years was sluggish. This was below our standards and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Landstar’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.4% annually. Landstar isn’t alone in its struggles as the Ground Transportation industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Van Equipment and Platform Equipment, which are 47.6% and 34.1% of revenue. Over the last two years, Landstar’s Van Equipment revenue (full truckload van transportation) averaged 7.6% year-on-year declines. On the other hand, its Platform Equipment revenue (full truckload trailer transportation) averaged 1.4% growth.

This quarter, Landstar missed Wall Street’s estimates and reported a rather uninspiring 3.2% year-on-year revenue decline, generating $1.17 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below the sector average.

Landstar has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 19.8% gross margin over the last five years. That means Landstar paid its suppliers a lot of money ($80.21 for every $100 in revenue) to run its business.

Landstar produced a 7.3% gross profit margin in Q4, down 12.3 percentage points year on year. Landstar’s full-year margin has also been trending down over the past 12 months, decreasing by 3.6 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Landstar was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.3% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Landstar’s operating margin decreased by 4.5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. We’ve noticed many Ground Transportation companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction, but Landstar’s performance was poor no matter how you look at it. It shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Landstar generated an operating margin profit margin of 2.5%, down 2.2 percentage points year on year. Since Landstar’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Landstar, its EPS declined by 7.9% annually over the last five years while its revenue grew by 2.8%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

Diving into the nuances of Landstar’s earnings can give us a better understanding of its performance. As we mentioned earlier, Landstar’s operating margin declined by 4.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Landstar, its two-year annual EPS declines of 33% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q4, Landstar reported EPS of $0.70, down from $1.31 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Landstar’s full-year EPS of $3.31 to grow 64%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Landstar has shown mediocre cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 5.7%, subpar for an industrials business.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Landstar hasn’t been the highest-quality company lately because of its poor revenue and EPS performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 40.4%, splendid for an industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Landstar’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

We were impressed by how significantly Landstar blew past analysts’ Platform Equipment revenue expectations this quarter. On the other hand, its Van Equipment revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 2% to $150.23 immediately following the results.

Updated: January 28, 2026 at 4:35 PM EST

Before investing in or passing on Landstar, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Landstar doesn’t pass our quality test. To begin with, its revenue growth was weak over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Landstar’s P/E ratio based on the next 12 months is 28.1x. This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $150.27 on the company (compared to the current share price of $150.23).