Last update on 2024-06-07

Landstar System (LSTR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Evaluate Landstar System (LSTR) using the Piotroski F-Score. Our 2023 analysis scores LSTR at 7/9, showcasing it as a potentially strong investment.

Short Analysis - Piotroski Score: 7

We're running Landstar System (LSTR) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a measure of a company's financial health between 0 to 9, based on profitability, liquidity, and leverage criteria. Landstar System (LSTR) was evaluated and scored a 7 on the Piotroski scale, indicating strong financials. Key points include consistent positive net income and cash flow, a slight decrease in return on assets, less debt, improved liquidity with a higher current ratio, share buybacks reducing dilution, an increased gross margin, and a decrease in asset turnover.

Insights for Value Investors Seeking Stable Income

With a Piotroski score of 7, Landstar System (LSTR) shows a relatively strong financial position. The company's consistent profitability, operational efficiency, and prudent financial management suggest it's worth considering as an investment. However, potential investors should investigate the decrease in return on assets and asset turnover to fully understand any underlying issues. Overall, LSTR's financials appear solid, making it a viable candidate for further analysis and possibly adding to an investment portfolio.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Landstar System (LSTR)

Company has a positive net income?

Net income measures a company's profitability over a specific period, typically a fiscal quarter or year. A positive net income indicates that the company is profitable, meaning it has more revenues than expenses. This is a critical criterion as it reflects the company's ability to generate profit and sustain its operations, impacting its valuation and investor's confidence.

For the fiscal year 2023, Landstar System (LSTR) reported a net income of $264,394,000. This is indeed a positive figure, continuing a consistent trend of profitability over the past 20 years, as illustrated by their net income values: [50.7M (2003), 71.9M (2004), 119.9M (2005), etc., up to 430.9M (2022)]. This figure, while lower than the $430,914,000 reported in 2022, maintains the company's record of positive net income. Hence, for the Piotroski analysis, LSTR earns a point on this criterion, as consistent profitability is a sign of a fundamentally strong business. However, the decline from the previous year could raise concerns that require further investigation into the reasons behind this decrease.

Company has a positive cash flow?

Cash Flow from Operations (CFO) examines the cash generated by a company's regular operational activities. It's a key indicator of financial health, showing if the core business generates enough cash to sustain and grow.

For 2023, Landstar System's (LSTR) CFO stands at $393,648,000, which is positive. This is a good trend, as positive CFO indicates that the company is efficiently generating cash from its operations, which is essential for meeting its short-term liabilities and financing future investments. A historical look at the past 20 years shows variability, with significant positive CFO in various years, especially notable peaks in 2018 at $297,901,000 and 2022 at $622,659,000. This consistency in generating positive CFO suggests financial stability and operational efficiency.

Return on Assets (ROA) are growing?

Comparing the Return on Assets (ROA) of Landstar System (LSTR) between 2022 and 2023 to measure its efficiency in utilizing its assets to generate profits. A higher ROA indicates better management and effective use of assets.

In 2023, Landstar System's ROA was 0.1416, down from 0.2167 in 2022. This represents a significant decrease, lowering its efficiency in generating profits from its assets. Hence, for the Piotroski analysis, we must reduce 1 point as the ROA has decreased. Compared to the industry median, which demonstrates a relatively stable but slightly declining trend, Landstar's performance shows it may be under more strain.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income measures whether a company's core business operations are generating more cash than the net income it reports. This is crucial as it indicates strong cash generation capabilities and potentially conservative accounting practices, reflecting a company's financial health more accurately.

For Landstar System (LSTR), the Operating Cash Flow for 2023 stood at $393.65 million, notably higher than the reported Net Income of $264.39 million. This adds a point in the Piotroski score, illustrating robust cash flows and a strong operational performance. Historically, Landstar has experienced fluctuating operating cash flows, with a marked increase in recent years. Specifically, the period from 2020 to 2023 saw Operating Cash Flow rising from $276.74 million to $622.66 million in 2022 before adjusting to $393.65 million in 2023. These figures underscore a consistent ability to generate cash, contrasting with a more volatile net income over the years, which includes significant peaking in 2021 at $381.52 million and 2022 at $430.91 million before decreasing to $264.39 million in 2023. The positive delineation of Operating Cash Flow over Net Income reinforces Landstar's competent financial stewardship and operational resilience, thus earning it a +1 in Piotroski's analysis.

Liquidity of Landstar System (LSTR)

Leverage is declining?

Change in leverage measures the change in a company's level of debt compared to its equity. It is important to assess the company's financial risk.

For Landstar System (LSTR), the leverage ratio in 2023 is 0.024 compared to 0.0348 in 2022. This shows a decrease in leverage, which implies that the company has reduced its financial risk. Such a trend is advantageous as it suggests Landstar System is less reliant on debt, thereby improving its financial stability. However, leverage has fluctuated over the past 20 years and has shown an overall declining trend, emphasizing the company's effort to manage financial risk prudently. Given the decrease in leverage from 2022 to 2023, this criterion rightly earns 1 point.

Current Ratio is growing?

Change in Current Ratio for Landstar System indicates the company's ability to meet its short-term liabilities with short-term assets. Calculating this helps in understanding liquidity and operational efficiency.

Landstar's Current Ratio increased from 1.6391 in 2022 to 2.0034 in 2023, thus, adding 1 point to its financial score. This suggests improved short-term liquidity and a better capability to cover short-term obligations. Over the last 20 years, 2023's ratio of 2.0034 is one of the highest, surpassed only by 2005's figure of 2.0494. Compared to the industry median of 1.1884 in 2023, Landstar's Current Ratio stands strong as well, further solidifying its position in the market. This uptick represents prudent financial management amid potentially volatile economic conditions. It reflects a significantly better short-term financial health than its industry's typical performance over the past two decades.

Number of shares not diluted?

Evaluating the change in outstanding shares is important because it reflects the company's equity structure and potential dilution effect on shareholders.

For Landstar System (LSTR), the outstanding shares decreased from 36,633,000 in 2022 to 35,920,000 in 2023. This suggests a reduction in shares, adding 1 point to this criterion. Historically, it’s evident that Landstar has been consistently reducing its outstanding shares over the years, decreasing from 63,840,000 in 2003 to the current 35,920,000 in 2023. This trend is positive, as it indicates share buybacks aimed at reducing dilution and potentially increasing shareholder value. The consistent decrease over the last two decades demonstrates a long-term commitment to enhancing per-share metrics.

Operating of Landstar System (LSTR)

Cross Margin is growing?

Change in Gross Margin evaluates if a company is improving its core profitability. It compares the gross margin year-on-year to assess if the management is effectively controlling production costs relative to revenue. An increase indicates better operational efficiency and pricing strategies.

For Landstar System (LSTR), the gross margin has increased from 0.1291 in 2022 to 0.1347 in 2023. This upward trend warrants a score of 1 point for this criterion, reflecting improved operational efficiency. The historical data illustrates fluctuations in gross margin, notably lower during economic downturns like 2008 and 2020, but the recent increase to 0.1347 in 2023 is a positive sign. Despite being below the 2023 industry median of 0.1817, this internal improvement is encouraging for LSTR's profitability.

Asset Turnover Ratio is growing?

Comparison of asset turnover from year to year to determine the efficiency in asset utilization.

The Asset Turnover for Landstar System decreased from 3.7395 in 2022 to 2.8408 in 2023. Consequently, this indicates a decline in the company’s efficiency in generating revenue from its assets. Specifically, the asset turnover has dropped by approximately 24%, which is indicative of a negative trend rather than an increase, thereby earning a score of 0 according to Piotroski's criteria. Over a 20-year analysis, Landstar's Asset Turnover has experienced significant fluctuations, reflecting its operational challenges in maintaining asset efficiency consistently at such a level.