YRC Worldwide Initiated as Neutral

We initiate coverage for YRC Worldwide Inc. (YRCW) with a Neutral recommendation, which means the stock will perform mostly in line with the broader market. Net earnings in the second quarter 2010 were significantly above the Zacks Consensus Estimate but revenue fell below it. Although YRC Worldwide reported signs of some revival, we still believe that the company continues to face the threat of bankruptcy.

YRC Worldwide is facing major challenges including sustaining liquidity, dilution of preferred stock, loss of customers and a weak LTL market. The company is trying to deter total financial collapse in every possible way. Despite prudent moves to manage liquidity we believe YRC Worldwide will continue to need cash for operations.

During the second quarter 2010, YRC Worldwide saved $85 million in pension-related expenses. In January 2011, the company’s pension liability will escalate to more than $300 million. Management desperately needs to renegotiate the agreement with the union failing which the company will face a severe liquidity crisis.

During the past one year, YRC Worldwide securitized a portion of its outstanding debt by issuing 1.2 billion common shares. This massive increase in the total number of outstanding shares significantly reduces the company’s stock price. YRC Worldwide has decided to conduct a reverse stock-split, but is yet to decide the magnitude and date.

Nevertheless, recent measures like debt-to-equity exchange and divestment of YRC’s Logistic businesses may become beneficial for the company. According to our view, YRC Worldwide’s viability depends on its ability to become profitable but unfortunately we do not expect the company to reach that stage any time soon.

YRC WORLDWD INC (YRCW): Free Stock Analysis Report

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7 Comments on YRC Worldwide Initiated as Neutral

  1. q2 rev. was down from drivers decreasing compared with last year
    the key is the earning which is a indicator for co. operating
    it is a main goal to make co. positive earning for survive first
    then ….others

  2. And the dirty, commie, white collar plan goes on with total control over organized labor and fare pay. Thank you commie pig republican for ruining my job and future!!
    A force of one shares no secrets with no one.
    8 trillion dollar debt dumped on America by Bush and the republicans. Their real leaders, Beck, Limbaugh, Hannity, and Fox control the stupid with special interest babble and rhetoric.
    Now we shall engage in a great civil war and a decade of depression and poverty. And when its over the special interest, republican government mafia will rule with an iron fist, And the Bush crime family shall be the gestapo!!

  3. Pure crap….just a bla,bla,bla I had seen before in other blogs. Here the analysis does not show any serious numbers besides the outstanding number of shares increase. The chances of bankrupcy have been declared as less than 10% by many other analysts, this, there is no bankruptcy coming for this company. The target price of this stock is 0.50 by consensus with a strong support a 0.26 as its 50 days moving average. I would no recommend to buy now but as soon as it surpasses the 0,30 resistance. Don;t sleep, you will lose the opportunity.
    By the time this company appears in the main headlines announcing its final stable growth, it will be already too late. Good luck

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