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YRC Soars as Trucker's Seven-Year Losing Streak Seen Ending

Nov 01, 2015 at 08:35 AM CST

YRC Worldwide Inc. climbed the most in more than two years after posting third-quarter earnings that beat analysts’ estimates, suggesting to some that the trucker’s seven-year losing streak will finally end in 2015.

Adjusted earnings before interest, taxes, depreciation and amortization were $99.1 million, beating the $81.5 million average of estimates compiled by Bloomberg, marking the best third quarter since 2008, the company said Thursday. While the trucking company moved less freight in the third quarter, it was still able to improve its operating income -- by 89 percent -- as it retains a disciplined pricing strategy.

“Our enthusiasm for YRCW is fully intact as the operational opportunities are so significant that barring an outright recession, those should be the biggest factor in driving” earnings improvement, Thom Albrecht, an analyst with BB&T Capital Markets, said in a note to clients Friday.

YRC gained 32 percent, the biggest jump since May 2013, to $18.26 at the close in New York. The rally parerd YRC’s decline this year to 19 percent, compared with the the 3.6 percent drop on the Russell 2000 Index.

YRC was once the biggest trucking company in the U.S. by sales, before the stumbles that twice dragged it to the brink of default since 2009. It still has $1.08 billion of debt, but a second straight earnings beat signals that the Overland Park, Kansas-based company will make a profit, even amid sluggish economic growth.

The average analyst forecast for adjusted fiscal 2015 earnings is 94 cents a share, which would mark the first profit on that basis since 2007, according to data complied by Bloomberg.

“YRCW has put together two consecutive very strong quarters and the continued margin expansion at both YRC Freight and Regional has given us even more confidence in the company’s turnaround story,” Deutsche Bank AG analyst Robert Salmon wrote in a note to clients.