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# Landstar Stock Plunges 17% As Insurance Claims Costs Swallow A 25% Revenue Surge
- URL: https://www.bullished.co/landstar-stock-plunges-17-as-insurance-claims-costs-swallow-a-25-revenue-surge-f9dc4b8d/
- Published: 2026-10-28T19:11:21.000Z
- Updated: 2026-10-28T19:11:21.000Z
- Description: Revenue rose 25% in the third quarter, but a jump in claims costs cut the gross margin to 8.4% from 9.2%.
- Author: Matteo Parrino
- Tags: Earnings, LSTR, Industry: Industrials

[Landstar System](https://www.bullished.co/tag/lstr/), which arranges freight for shippers through independent agents and outside truck operators, saw its shares plunge 17% in Wednesday trading after its [10-Q](https://www.sec.gov/Archives/edgar/data/0000853816/000119312526435898/d153250d10q.htm?ref=bullished.co) showed insurance and claims costs of $55,270,000 in the third quarter, up from $33,008,000 a year earlier. The expense jump came as quarterly revenue grew 25%.

## Claims costs outrun the sales gain

Revenue for the thirteen weeks ended September 26, 2026 reached $1,511,787,000, and truck revenue rose 29%, according to the company's [earnings release](https://www.sec.gov/Archives/edgar/data/0000853816/000119312526434270/d176512dex991.htm?ref=bullished.co). Gross profit margin still slipped to 8.4% from 9.2% a year earlier.

The insurance segment swung to an operating loss of $9,024,000 from income of $7,763,000\. Net unfavorable adjustments to prior years' claims estimates were $21,924,000 in the quarter against $9,219,000 a year ago, or [$0.48 per share](https://www.freightwaves.com/news/insurance-claims-adjustments-tank-landstars-otherwise-strong-q3?ref=bullished.co) versus $0.20.

The release breaks out about [$13.0 million](https://www.freightwaves.com/news/insurance-claims-adjustments-tank-landstars-otherwise-strong-q3?ref=bullished.co) of adverse actuarial reserve adjustments and $8.0 million tied to settlements of a 2024 brokered truck accident claim and a 2025 accident involving an independent truck owner. CEO Frank Lonegro said, "we are not immune to the challenges of the insurance and claims inflation prevalent in our industry."

## A $21 million settlement accrual

The 10-Q adds a $21,000,000 liability for anticipated settlement payments above Landstar's self-insured retention. It records a matching receivable from insurers, shows both gross, and calls collection probable.

Landstar keeps liability for trucking claims up to $5 million per occurrence and buys excess coverage above that. The filing says excess premiums for coverage above $10 million rose about 390% since the policy year ended April 30, 2020, and cites so-called nuclear verdicts, large jury awards in trucking injury cases. It also says a court ruling, Montgomery v. Caribe Transport II, narrowed its ability to use a federal preemption defense against broker negligence claims.

## Cash flow and the stock

Cash from operations fell to $98,719,000 for the first thirty-nine weeks from $152,169,000, as receivables rose $252,372,000 against $34,724,000 a year earlier. Net unfavorable prior-year claims adjustments for that period were $37,317,000, against $22,860,000.

Net income for the quarter was $48,043,000, or $1.42 per share, against $19,364,000, or $0.56, a year earlier, when a $30,104,000 non-cash impairment hit results. The stock's market value stood near $5.7 billion after the drop.

Management said on its earnings call it expects variable contribution margin to compress by 20 to 30 basis points, according to [Seeking Alpha](https://seekingalpha.com/news/4658614-landstar-anticipates-q3-to-q4-seasonality-of-1-percent-higher-truck-revenue-per-load-with?ref=bullished.co). The board declared a $0.44 quarterly dividend payable December 8, 2026.

Landstar's fourth-quarter results will show whether the reserve additions continue.

### Sources

- [10-Q Filing — Landstar System (LSTR)](https://www.sec.gov/Archives/edgar/data/0000853816/000119312526435898/d153250d10q.htm?ref=bullished.co) — SEC EDGAR
- [10-Q Filing — Landstar System (LSTR), Q2 FY2026 filed 2026-07-29 (comparison basis)](https://www.sec.gov/Archives/edgar/data/0000853816/000119312526322966/d144668d10q.htm?ref=bullished.co) — SEC EDGAR
- [Earnings release (8-K Item 2.02, d176512dex991.htm) — Landstar System, filed 2026-10-27](https://www.sec.gov/Archives/edgar/data/0000853816/000119312526434270/d176512dex991.htm?ref=bullished.co) — SEC EDGAR
- [Insurance claims adjustments tank Landstar’s otherwise strong Q3 - FreightWaves](https://www.freightwaves.com/news/insurance-claims-adjustments-tank-landstars-otherwise-strong-q3?ref=bullished.co) — freightwaves.com
- [Landstar (LSTR) Reports Q3 Earnings: What Key Metrics Have to Say](https://finance.yahoo.com/markets/stocks/articles/landstar-lstr-reports-q3-earnings-233002094.html?.tsrc=rss&ref=bullished.co) — Yahoo Finance
- [Landstar System (LSTR) Surpasses Q3 Earnings and Revenue Estimates](https://finance.yahoo.com/markets/stocks/articles/landstar-system-lstr-surpasses-q3-212007070.html?.tsrc=rss&ref=bullished.co) — Yahoo Finance
- [Landstar System Non-GAAP EPS of $1.42 misses by $0.24, revenue of $1.51B beats by $10M (LSTR:NASDAQ)](https://seekingalpha.com/news/4658371-landstar-system-non-gaap-eps-of-142-misses-by-024-revenue-of-151b-beats-by-10m?ref=bullished.co) — seekingalpha.com
- [Landstar anticipates Q3-to-Q4 seasonality of \~1% higher truck revenue per load with 20-30 bps variable contribution margin compression (NASDAQ:LSTR) | Seeking Alpha](https://seekingalpha.com/news/4658614-landstar-anticipates-q3-to-q4-seasonality-of-1-percent-higher-truck-revenue-per-load-with?ref=bullished.co) — seekingalpha.com

### More on Landstar System

- [Landstar CEO Rules Out Big Brokerage Purchase, Favors 'Little M&A' To Win Agents](https://www.bullished.co/landstar-ceo-rules-out-big-brokerage-purchase-favors-little-m-and-a-to-win-agents-aae09cae/)
- [Landstar CFO Calls $35 Million A Quarter In Insurance Costs 'Too Light' After $22 Million Hit](https://www.bullished.co/landstar-cfo-calls-35-million-a-quarter-in-insurance-costs-too-light-after-22-million-hit-404943c5/)
- [Landstar Third-Quarter EPS Jumps 154% To $1.42, But Insurance Costs Climb To $55.3 Million](https://www.bullished.co/landstar-third-quarter-eps-jumps-154-to-1-42-but-insurance-costs-climb-to-55-3-million-00af1427/)

[All Landstar System (LSTR) coverage →](https://www.bullished.co/tag/lstr/)