Thursday, January 24, 2013

YRCW Off 10% Why? Who Knows

Shares of beleaguered trucking firm YRC Worldwide (YRCW) are down 6 cents, almost 10%, at 55 cents. Why is not exactly clear. There’s no apparent news today, and the Q1 report isn’t due till May 4.

YRC shares often trade to their own shifting rhythm, but it’s possible to speculate on factors that might be affecting the stock.

“At the end of the day, people don’t know how to value the stock given there’s no clear indication about how many shares are outstanding following the bond exchange and in advance of what is expected to be a reverse stock split,” says Longbow Research analyst Lee Klaskow, who has a “Neutral” rating on shares of YRC.

The company almost went bankrupt last December but managed to roll over its debt with a stock swap, and the stock is still working through the complex rejiggering that may happen. The estimates for Q1 range from a loss of 11 cents per share all the way to a loss of $1.32. For the fiscal year, the range is from a loss of 26 cents to a loss of $3.72!

“People are guessing there will be a little over a billion shares outstanding before the split, but we don’t know what that split will be,” says Klaskow, “whether 1 for 5, or 1 for 10, or something else.”

CEO Bill Zollars has said YRCW will return to pre-tax profit in Q2, something that could help the shares or seriously trounce them if it doesn’t come through when the company offers its outlook on May 4.

“We’re somewhat optimistic on the company’s ability to come out,” of one of the worst trucking markets in history, says Klaskow. “We don’t think the stock is going to zero, and yet the unknown is pretty significant,” he adds.

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