The company is a provider of freight transportation services and supply chain solutions.
The firm said the upgrade was the result of "improving truck transportation pricing and load trends, SG&A operating leverage, improving manufacturing demand and an under-levered balance sheet that will likely fund a significant step-up in share repurchases."
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TheStreet Ratings team rates LANDSTAR SYSTEM INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LANDSTAR SYSTEM INC (LSTR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Road & Rail industry. The net income increased by 75.3% when compared to the same quarter one year prior, rising from $33.98 million to $59.56 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 0.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- LSTR's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LSTR has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $26.67 million or 19.59% when compared to the same quarter last year. In addition, LANDSTAR SYSTEM INC has also modestly surpassed the industry average cash flow growth rate of 12.42%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: LSTR Ratings Report