Is Landstar (LSTR) a Sell or a Strategic Buy in a Weak Transportation Sector?

The transportation sector is grappling with a perfect storm of macroeconomic headwinds, from inflation-driven cost pressures to shifting global supply chains. Landstar System (LSTR), a logistics and freight brokerage giant, has been hit particularly hard. While its Q2 2025 earnings of $1.20 per share beat the Zacks Consensus Estimate, the figure marked an 18.9% year-over-year decline, reflecting broader industry struggles [1]. Revenue of $1.21 billion, though slightly above estimates, fell 1.1% YoY, with ocean and air cargo segments contracting 28.7% [1]. Landstar’s Zacks Rank of #4 (Sell) and Value Score of D underscore its weak fundamentals, as earnings estimates for 2025 have dropped 3.89% over 60 days [1].

Yet, contrarian value investors often thrive in such environments. Landstar’s aggressive share repurchase program—$42.4 million spent in Q2 to buy back 300,141 shares—signals management’s belief in the stock’s intrinsic value [1]. The company has reduced its outstanding shares by over a third since 2011, a testament to its long-term commitment to shareholder returns [1]. However, this optimism must be weighed against the broader context: Landstar’s stock has plummeted 22.7% year to date, underperforming the transportation-truck industry’s 14.7% decline [1].

To assess whether LSTR is a sell or a strategic buy, it’s critical to contrast it with stronger peers. Knight-Swift (KNX), a rival in the truckload and LTL segments, boasts a Zacks Rank of #3 (Hold) and a Value Score of B. Its Q2 2025 adjusted EPS surged 45.8% YoY to 35 cents, driven by a 0.8% revenue increase to $1.86 billion [2]. While KNX missed revenue estimates, its earnings growth and stable liquidity position ($216.32 million in cash) suggest resilience [2]. Greenbrier (GBX), a railcar leasing and manufacturing company, is even more compelling. With a Zacks Rank of #2 (Buy) and a 33% expected earnings growth rate for 2025, GBX has outperformed estimates in three of four quarters and secured $850 million in extended credit facilities [3]. Its $2.6 billion railcar backlog further insulates it from near-term volatility [3].

Landstar’s contrarian appeal lies in its undervaluation and buyback discipline. However, the company’s earnings revisions and weak Zacks Rank indicate deteriorating fundamentals. For instance, the Zacks Consensus Estimate for LSTR’s third-quarter 2025 earnings has fallen 7.35% in 60 days, signaling investor skepticism [1]. In contrast, KNX and GBX have demonstrated stronger earnings momentum and better alignment with industry trends.

The key question for investors is whether Landstar’s buybacks and historical share reduction can offset its earnings decline. While repurchases can boost EPS in the short term, they are a double-edged sword if the company’s core business is deteriorating. Landstar’s truck transportation segment, which accounts for 89.8% of revenue, has shown modest growth (1.1% YoY), but this is insufficient to counterbalance the collapse in ocean and air cargo [1]. Meanwhile, KNX’s 1.9% YoY growth in truckload and LTL revenue (excluding fuel surcharges) highlights its superior operational flexibility [2].

For long-term investors, Landstar’s strategic buyback program and low valuation (trading at a discount to peers) could present an opportunity if the sector stabilizes. However, the current Zacks Rank and earnings trajectory suggest a high-risk proposition. In a weak transportation sector, patience and diversification are paramount. Investors seeking safer contrarian plays might prefer KNX’s stable cash flow or GBX’s robust growth profile.

Source:
[1] Landstar (LSTR) Down 0.2% Since Last Earnings Report [https://www.zacks.com/stock/news/2744331/landstar-lstr-down-02-since-last-earnings-report]
[2] Knight-Swift (KNX) Down 6.2% Since Last Earnings Report [https://finance.yahoo.com/news/knight-swift-knx-down-6-153008340.html]
[3] Greenbrier Reports Third Quarter Results [https://pressroom.gbrx.com/2025-07-01-Greenbrier-Reports-Third-Quarter-Results]