Old Dominion Freight Line (NASDAQ: ODFL) and Landstar System (NASDAQ:LSTR) are both mid-cap transportation companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitabiliy, earnings, analyst recommendations, valuation, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Old Dominion Freight Line and Landstar System, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Old Dominion Freight Line 0 5 3 0 2.38
Landstar System 2 4 2 0 2.00

Old Dominion Freight Line presently has a consensus price target of $96.13, suggesting a potential upside of 0.89%. Landstar System has a consensus price target of $82.67, suggesting a potential downside of 0.58%. Given Old Dominion Freight Line’s stronger consensus rating and higher probable upside, research analysts clearly believe Old Dominion Freight Line is more favorable than Landstar System.

Valuation and Earnings

This table compares Old Dominion Freight Line and Landstar System’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Old Dominion Freight Line $3.12 billion 2.51 $718.76 million $3.85 24.75
Landstar System $3.33 billion 1.05 $271.70 million $3.46 24.03

Old Dominion Freight Line has higher revenue, but lower earnings than Landstar System. Landstar System is trading at a lower price-to-earnings ratio than Old Dominion Freight Line, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Old Dominion Freight Line has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, Landstar System has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Dividends

Old Dominion Freight Line pays an annual dividend of $0.40 per share and has a dividend yield of 0.4%. Landstar System pays an annual dividend of $0.36 per share and has a dividend yield of 0.4%. Old Dominion Freight Line pays out 10.4% of its earnings in the form of a dividend. Landstar System pays out 10.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider & Institutional Ownership

75.1% of Old Dominion Freight Line shares are owned by institutional investors. Comparatively, 97.1% of Landstar System shares are owned by institutional investors. 12.0% of Old Dominion Freight Line shares are owned by insiders. Comparatively, 1.0% of Landstar System shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Old Dominion Freight Line and Landstar System’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Old Dominion Freight Line 10.19% 16.87% 11.61%
Landstar System 4.37% 26.11% 13.28%

Summary

Old Dominion Freight Line beats Landstar System on 11 of the 16 factors compared between the two stocks.

Old Dominion Freight Line Company Profile

Old Dominion Freight Line, Inc. is a union-free motor carrier providing regional, inter-regional and national less-than-truckload (LTL) services. The Company’s LTL services include ground and air expedited transportation for time-sensitive shipments, consumer household pickup and delivery and freight delivery services throughout North America. In addition to its LTL services, the Company offers a range of other value-added services that include container drayage, truckload brokerage, supply chain consulting and warehousing. As of December 31, 2016, the Company operated 226 service center locations, of which it owned 182 and leased 44. As of December 31, 2016, its network included 10 breakbulk facilities located in Rialto, California; Atlanta, Georgia; Columbus, Ohio; Indianapolis, Indiana; Greensboro, North Carolina; Harrisburg, Pennsylvania; Memphis and Morristown, Tennessee; Dallas, Texas, and Salt Lake City, Utah. As of December 31, 2016, the Company owned 7,994 tractors.

Landstar System Company Profile

Landstar System, Inc. (Landstar) is an asset-light provider of integrated transportation management solutions. The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to enterprise solutions to manage customer’s transportation needs. It operates in two segments: the Transportation Logistics segment and the Insurance segment. The Transportation Logistics segment provides a range of integrated transportation management solutions. Transportation services offered by it include truckload and less-than-truckload transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul or specialized, the United States-Canada and the United States-Mexico cross-border, project cargo and customs brokerage. The insurance segment consists of Signature Insurance Company, which is an offshore insurance subsidiary, and Risk Management Claim Services, Inc.

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