What Happened?
Shares of freight delivery company Landstar (NASDAQ: LSTR) fell 3.3% in the morning session after the company reported second-quarter financial results that revealed a significant drop in year-over-year profitability, leading to several analyst price target cuts.
Although the company's earnings per share of $1.20 slightly beat analyst expectations, investors focused on the significant year-over-year decline. Net income dropped 20.4% to $41.89 million, and earnings per share fell 18.9% from the same quarter last year. The results highlighted a challenging freight market, with gross profit also falling. Following the report, several investment firms, including Evercore ISI, UBS, and Susquehanna, lowered their price targets on the stock, signaling reduced expectations for its future performance. Adding to the concerns, commentary from the company's earnings call indicated that while truck volumes in July were slightly above the prior year, revenue per load was trending below, suggesting continued pressure on profitability.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Landstar? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Landstar’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 7.3% on the news that the major indices popped (Nasdaq +3.4%, S&P 500 +2.5%) in response to the positive outcome of U.S.-China trade negotiations, as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions. This rollback cuts U.S. tariffs on Chinese goods to 30% and Chinese tariffs on U.S. imports to 10%, giving companies breathing room to reset inventories and supply chains. However, President Trump clarified that tariffs could go "substantially higher" if a full deal with China wasn't reached during the 90-day pause, but not all the way back to the previous levels. Still, the agreement has cooled fears of a prolonged trade war, helping stabilize expectations for global growth and trade flows and fueling renewed optimism. The optimism appeared concentrated in key trade-sensitive sectors, particularly technology, retail, and industrials, as lower tariffs reduce cost pressures and restore cross-border demand.
Landstar is down 21% since the beginning of the year, and at $134.63 per share, it is trading 30.6% below its 52-week high of $193.87 from July 2024. Investors who bought $1,000 worth of Landstar’s shares 5 years ago would now be looking at an investment worth $1,087.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free and will only take you a second.
