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Why YRC Worldwide Inc.'s Shares Jumped 18% Today

By Travis Hoium – Jul 29, 2016 at 12:55PM

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Better than expected earnings overshadowed a shrinking business in Q2 2016.

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What: Shares of trucking logistics company YRC Worldwide Inc. (YELL 0.53%) jumped as much as 18% today after reporting second-quarter earnings results. At 12:05 p.m. EDT shares were still up 15.5%.

So what: Operating revenue fell 4% in the quarter to $1,207.6 million and net income fell $1.1 million to $30.3 million, or $0.83 per share, in the quarter. But analysts had expected only $0.51 per share in earnings, and investors had lowered expectations for the year as well. So, it's not growth that's driving the stock today, but rather beating already low expectations. 

Now what: The macro environment isn't particularly strong for the trucking industry, and that's weighing on YRC Worldwide. But the company can control costs and what it charges for value-added services, which is what's keeping the bottom line strong for now. I would like to see some more consistent demand growth before jumping into shares, but for now YRC Worldwide's steady results should keep investors from pushing the stock much lower, which is a concern given weak performance so far in 2016.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not 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.

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