As fellow Fool Lalit Kumar pointed out, the less-than-truckload, or LTL, industry has been plagued by a pricing war since 2008, which has severely hurt YRC Worldwide (NASDAQ:YRCW). YRC was recently priced to go out of business, and this year's share rally of 80% suggests that investors are betting the company may escape that fate.
But don't hop on board quite yet. The company's current negative free cash flow needs to improve in order to meet interest expense obligations. Long story short, YRC isn't making any money and most likely won't be able to issue more debt, so that leaves the company with only one option -- issue equity. The company hasn't had a big share issue yet, but doing so will negatively influence the stock price and should be seen as a move of last resort.
In the following video, Motley Fool analyst Blake Bos covers the financial woes facing the company and gives investors his takeaway on the events plaguing the company today.
Blake Bos and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.