Deutsche Bank Reiterating Buy On Landstar System

Deutsche Bank is reiterating its Buy rating and $54 price target on shares of Landstar System, Inc. LSTR. In a note to clients, Deutsche Bank writes, "We are reiterating our Buy-rating and $54 PT (20x our 2012 EPS estimate of $2.70/ share) ahead of today's 2PM mid-quarter conference call as we see compelling valuation at current levels with the shares trading at a 27% discount to its closest peer CHRW and only a 6% premium to the more asset-intensive TLs (net of SWFT) based on our NTM P/E multiples (7 months of 2011 and 5 months of 2012). While LSTR shares are trading at 19.5x our NTM EPS estimate, we believe its returns (an estimated 42% ROE and 29% ROTC in 2011), solid earnings growth (the company targets greater than 15% annual EPS growth), asset-light business model, and strong free cash flow generation (we are modeling $2.30/share of free cash flow in 2011, which equates to a roughly 5% free cash flow yield on yesterday's closing price) justify a premium multiple." Shares of LSTR gained 85 cents yesterday to close at $47.01, a gain of 1.8%.