"When you find yourself in a hole, stop digging."
-- Will Rogers

YRC Worldwide (Nasdaq: YRCW) sure has dug itself deep. This trucker just finished the 19th renegotiation of its loan obligations to its bankers. Crunching the numbers, Credit Suisse declared the only real effect of the revamp is to ensure that "any future cash flows generated by YRCW will [go to] the banks ..."

Which is to say, it benefits YRC shareholders not at all. Little wonder that the stock appeared yesterday in a TheStreet.com article blasting the top five most-sell-rated stocks on the planet. According to TheStreet, barely half a dozen analysts think YRC is worth holding today, and seven say you should put this stock out of your portfolio's misery, and sell. Are they right?

YRC's "black hole" balance sheet
In a word: "Yes." With a market cap of only $183 million, but $945 million in net debt, YRC today looks less like a viable company, and more like a never-ending cornucopia of interest revenue for its lenders. Over the past 12 months, YRC paid $173 million in interest to its lenders -- nearly as much as its market cap. The last year it made enough operating profit to comfortably support such usury was in 2007, when our economy looked much different from today. (Even in that year, the company ran a slight free cash flow deficit.)

True, some say American industry is turning around, and that the transports will follow. From what he's seeing among Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) subsidiaries, Warren Buffett believes the Great Recession really is over, and there will be no "double dip." General Electric (NYSE: GE) recently put its money where Buffett's mouth is, investing $432 million to retool its appliances division.

But to this Fool, it seems likely that any recovery that revives YRC's business prospects is just as likely to inflate interest rates. In other words, even if YRC's revenues do revive to the point where it starts making money, chances are it'll be forced to turn around, and give all that money to the banks. Meanwhile, Con-Way (Nasdaq: CNW) is buying trucks and gearing up to steal YRC's market share, and FedEx (Nasdaq: FDX) recently restructured its LTL business to better compete with YRC and others.

Foolish takeaway
Sometimes, the way to deal with a hole is to stop digging. With YRC, however, we should just fill in the hole, lay flowers upon the grave, and walk away.

Rich Smith does not own shares of, nor is he short, any company named above. The Motley Fool has a disclosure policy.

Berkshire Hathaway is a Motley Fool Inside Value selection. Berkshire Hathaway and FedEx are Motley Fool Stock Advisor picks. The Fool owns shares of Berkshire Hathaway and FedEx.

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