Wednesday started off great for investors in less-than-truckload-weight (LTL) trucker YRC Worldwide (YELL -1.63%). Yesterday after close of trading, YRC released an investor presentation updating on its prospects, and in early trading, YRC shares responded enthusiastically to the news, rising nearly 12%.
As the day wears on, however, investor enthusiasm seems to be wearing thin. As of 12:10 p.m. EST, YRC shares have already retreated to just a 2.6% gain.
Why? Let's dig into the presentation and find out.
YRC started off its presentation on a strong note, pointing out that it recorded $4.9 billion in revenue in 2019. Deeper inside the report, however, troubling trends emerge. For example, $4.9 billion was down from the $5.1 billion in revenue reported in 2019. Trailing-12-month revenue was down even further, to just $4.5 billion. And according to analysts, this is the trend to focus on, because YRC is expected to report just $4.5 billion in total revenue for this full year.
The news isn't all bad. While revenue is down, it may be stabilizing at the $4.5 billion level. Moreover, YRC notes that its declines in operating profit have reversed after falling 89% in 2019. Through the first three reported quarters of 2020, the company has already earned $53 million in operating profit, more than twice what it earned in all of last year.
Still and all, most analysts who follow the company are forecasting that on the bottom line, net income will still show a loss by the end of 2020 -- as much as $1.12 per share. Nothing in yesterday's report said that prediction will not come true, and with the prospect of a big net loss looming on the horizon, it's understandable that investors are once again getting nervous about owning YRC Worldwide stock.