Please ensure Javascript is enabled for purposes of website accessibility

Why YRC Worldwide Stock Crashed 18%

By Rich Smith - May 8, 2019 at 4:08PM

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

Losses triple. Management blames the weather.

What happened

Perpetually imperiled trucking stock YRC Worldwide (YELL 7.50%) took a tumble on Wednesday, closing the day down 18% after reporting a huge first-quarter 2019 loss -- about twice as bad as Wall Street had predicted.

Expected to lose $0.73 per share for the quarter, YRC instead reported a loss of $1.12 per share, pro forma, and $1.48 per share in GAAP figures.

Winter Storm Warning sign

Image source: Getty Images.

So what

YRC recorded a 2.5% decline in sales in Q1, $1.18 billion. Rising fuel costs combined with weaker sales to expand the company's operating loss, when compared with last year's Q1. Even with income tax credits offsetting some of the operating losses, this ended up costing YRC $1.48 per share in losses on the bottom line, more than three times as bad as last year's Q1 2018 loss.

In part, CEO Darren Hawkins blamed "severe winter weather events" for the company's disappointing results, noting that "approximately half of the 63-day quarter was impacted by weather events for both YRC Freight and our largest Regional carrier, Holland." At one point in late January, Hawkins said, "more than 25% of [Holland's] network was down or severely limited."

Now what

To right the ship, Hawkins says he'll be prioritizing "yield over tonnage" (i.e., profitability over sales) over the rest of this year. Hawkins also noted that the company recently secured a new national labor agreement with its drivers, which should help eliminate "customer concerns" that he said also affected Q1 results.

Analysts are optimistic that this will do the trick, predicting YRC will return to profitability ($0.55 per share) in Q2. Judging from today's trading action, however, it appears shareholders are not yet convinced.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Yellow Corporation Stock Quote
Yellow Corporation
$3.44 (7.50%) $0.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

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