Please ensure Javascript is enabled for purposes of website accessibility

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

By Travis Hoium – May 5, 2017 at 11:49AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A much bigger-than-expected loss had investors shipping their money elsewhere today.

What happened 

Shares of YRC Worldwide Inc. (YELL -1.43%) fell as much as 17.6% on Friday after the shipping company reported first-quarter earnings. At 11:20 a.m. EDT, the stock was still down 15.6% for the day. 

So what

Operating revenue was up 4.5% to $1.17 billion for the quarter but net loss more than doubled to $25.3 million, or $0.78 per share. Adjusted for one-time items, the loss was $0.70 per share, which still fell way short of the $0.27 loss analysts expected. 

A red semi truck traveling on the highway.

Image source: Getty Images.

Volume was up in the quarter but revenue per hundredweight was down 1.7% in the YRC freight segment, which drove the poor results. Regional transportation only saw a 0.2% increase in revenue per hundredweight excluding fuel surcharge, which wasn't enough to return to profitability. 

Now what

The first quarter is seasonally weak for YRC Worldwide, but its margin profile is so poor that investors shouldn't be jumping on the bandwagon today. I don't see any pricing power in the business, and it seems that results are unpredictable quarter after quarter. Shipping just isn't an attractive place for investors right now, and that's why the discount from last quarter and today doesn't give me any confidence in the company's future. 

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.