Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of YRC Worldwide Are Down Today

By Lou Whiteman - Updated Feb 5, 2021 at 12:24PM

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

The trucking company continues to struggle to accelerate.

What happened

Shares of YRC Worldwide (YELL -1.25%) fell more than 15% on Friday after the trucking company reported disappointing quarterly results. It's been a good environment for transportation companies, but YRC continues to sputter.

So what

After markets closed Thursday, YRC reported a fourth-quarter loss of 37 cents per share on revenue of $1.165 billion, missing analyst estimates for earnings by 13 cents per share on revenue that was slightly higher than expected.

There was a lot of noise in the numbers. Operating net income for the year came in at $56.5 million, but included a $45.3 million net gain on property disposals.

A truck and trailer on the highway.

Image source: Getty Images.

Shares are down more than 50% since the beginning of 2018, caught up in the company's effort to refine its business around regional less-than-truckload (LTL) services. LTL involves packing small shipments from multiple customers onto a single truck, and tends to be more lucrative than full-truck shipping but also more complex and cost-intensive.

The struggles have lasted more than a decade. In 2009, YRC barely avoided bankruptcy when it persuaded its bondholders to swap about $470 million in notes for equity.

YRC also said it is changing its name to Yellow Corporation, adopting one of the legacy brands from its past. In 2003, the former Yellow Corporation acquired Roadway in a $1 billion deal, forming Yellow Roadway. That company went on to roll up other brands, taking the YRC name.

"As we continue our transformation into a super-regional, LTL freight carrier, it is the right time to reintroduce the Yellow Corporation name and modernize the holding company brand," CEO Darren Hawkins said in a statement. "Migrating to one Yellow technology platform and creating one Yellow network are the key enablers of our enterprise transformation strategy, which is to provide a superior customer experience under one Yellow brand."

The new Yellow will also trade under the YELL ticker, effective Feb. 8.

Now what

Hawkins said that YRC saw volume and pricing improve in the fourth quarter, and given the tight capacity and high demand for transport services, there is reason to believe pricing will be stable, if not stronger, heading into 2021.

The new Yellow has $440 million in liquidity, and integrating all of its parts under one tech platform should help streamline operations. This company appears to be on the right road, but for my money there are better transportation investment opportunities out there than waiting on a Yellow turnaround.

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
$3.56 (-1.25%) $0.04

*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 service.

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 05/23/2022.

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.