Why Landstar (LSTR) Is Poised to Beat Earnings Estimates Again

If you are looking for a stock that has a solid history of beating earnings estimates and is well-positioned to continue that trend in its next quarterly report, you should consider Landstar System (LSTR). The company, which operates in the Zacks Transportation – Truck industry, shows potential for another earnings beat.

This shipper and warehouse has an established reputation for beating earnings estimates, especially looking at its two previous reports. The company boasts an average earnings surprise of 2.88% over the last two quarters.

For the last quarter, Landstar was expected to earn $2.50 per share and instead reported $2.58 per share, a surprise of 3.20%. The consensus for the previous quarter was $2.34 per share when it actually delivered $2.40 per share, a surprise of 2.56%.

Price and EPS are surprising

In the case of Landstar, estimates are trending higher, thanks in part to a history of earnings surprises. And when you look at the positive Zacks Earnings ESP (Expected Surprise Rate), that’s a great indicator of future earnings growth, especially when paired with the solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise almost 70% of the time. In other words, if you have 10 stocks in this combination, the number of stocks that beat the consensus could be as many as seven.

The Zacks Earnings ESP compares the Most Accurate Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is the Zacks Consensus version, which is defined in terms of change. The idea is that analysts reviewing their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Landstar currently has an Earnings ESP of +3.19%, suggesting that analysts have recently become optimistic about the company’s earnings prospects. This positive Earnings ESP, combined with the stock’s Zacks Rank #3 (Hold), indicates that another uptick is likely just around the corner. We expect the company’s next earnings report to be released on January 26, 2022.

However, investors should remember that a negative Earnings ESP reading does not indicate a failure to achieve profits, but a negative value reduces the predictive power of this indicator.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock’s rise. On the other hand, some stocks may hold their ground even if they fall short of the consensus price.

For this reason, it is very important to check a company’s Earnings ESP before its quarterly release to increase your chances of success. Make sure you use our Earnings ESP Filter to discover the best stocks to buy or sell before they are released.

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