YRCW: YRC Worldwide Proves Skeptical Investors Right
In December I wrote:
Nobody believes trucking company YRC Worldwide (YRCW) will earn the consensus estimate of $2.52 per share in 2008. If they did, the stock would be trading significantly higher than $17.50 per share.
After all, the company earned $5.00 per share in 2006 and is expected to pull in $2.40 this year.
Well, the $2.40 in 2007 turned out to be $1.88 – and that is only if you ignore $12.77 per share of impairment charges. Although the charges did not affect cash flows in 2007, they indicate that earnings in years gone by were higher than should have been reported in retrospect.
Since the article, the shares are down nearly 16%, compared with an 11% decline in the S&P 500. At one point the shares traded below $12 per share. Meanwhile, my favored trucking play, Landstar (LSTR - Annual Report) is up more than 5%. I still think Landstar offers a more compelling valuation and lower risk over the full economic cycle.
Disclosure: William A. Trent owns shares of Landstar (LSTR - Annual Report) at the time of publication.
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