In an analyst note published by Matthew Young at Morningstar, he broke down Landstar System Inc’s (NASDAQ:LSTR) encouraging management guidance update.  Management expects Q1 revenues in the $640-690 million range, within the Street consensus of $.59.

Some of the other note highlights are included below:

Landstar provided an encouraging mid-first-quarter guidance update–freight demand continues to improve, and tightening industry capacity is supporting decent pricing conditions. Despite pressure from unusually harsh winter weather, loads increased 2.7% and 2.0% (year over year), respectively, in January and February, while revenue per load was up 2.8% and 7.0%, respectively. Recall that during the fourth quarter, loads increased for the first time since mid-2012, and pricing turned positive in December. Management commented that several large accounts that were previously soft are now “showing signs of improvement,” and the overall favorable trends have continued into March.

On the downside, the firm is still seeing gross-margin pressure on business hauled by third-party carriers (driven by increased capacity costs). This is not a surprise, as almost all traditional highway brokers have seen similar compression over the past year. We expect Landstar to pass along some of the recent cost-of-hire increases as the year progresses and pricing power improves. Additionally, Landstar is generally more insulated from gross margin variability since more than half of its loads are hauled by captive owner-operators that are paid a fixed percentage of revenue.

Landstar System Inc. (NASDAQ:LSTR) is trading up 2.01% on Friday.