You hit the nail on the head last year ! What are your thought today ?
I own 18,000 shares and have over $250,000 in paper losses. I feel like this site and the Yahoo finance messaging site have provided me the emotional support that has enabled me to sustain over $200,000 in paper losses as the stock fell from 25 or so in November to below 14 now. I'd much rather have the $200,000, even though its nice to have emotional support from my fellow losers.
I need to preserve my capital. I plan to reduce my position to 10,000 shares or less and to buy out of the money January 2016 and 2017 calls instead of keeping so much money tied up in YRCW. I think this may trade down to 12 and possibly 10, so I can buy it back at a cheaper price in the future.
I do not think YRCW will go into bankruptcy. YRCW has survived. Its a going concern.
I do not think there will be quarters in the next two years where YRCW loses OVER a dollar a share, but I do think its likely for them to lose close to a dollar a share nearly EVERY quarter the same way they lost money in the past -- primarily purchasing transportation to make good on delivery guarantees. They have yet to purchase transportation to save money, as the union contract allows them to do.
Workmen's comp and lost lawsuits can produce $15+ million a quarter in losses -- 50 cents a share -- and screwing up purchasing transportation would be another 25 cents a share easily -- 50 cents in Winter. If things go PERFECTLY with rate increases, sales increases, lower labor costs, and productivity gains from new equipment, YRCW could make $.75 to $1.25 a share every quarter BEFORE purchased transportation, lost lawsuits, and workments comp. After all that though, it will be a $.80 a share loss up to a $.60 a share profit for the 2 or 3 years. I think its going to be at least another two years before YRCW is profitable every quarter. Sometime in 2018 or 2019, YRCW will have a trailing 4 quarters in which every quarter has positive EPS.
If and when that happens, YRCW will trade up to having a enterprise value to sales ratio of .5 Picture 2018 has $5.5 billion in sales. Enterprise value of $2.75 billion less a billion in debt will leave a $1.75 billion capitalization of 33 million shares (adding in a million shares for compensation of officers)-- $53 a share. That's a best case scenario.
Averaging my projection out of an 80 cent loss to a 60 cent a share profit every quarter for the next 2 years or so works out to a 10 cent a share loss every quarter, 40 cents a share loss per year, and if and when things go right, most likely a second quarter without heavy snow, a possible profit of 10 to 20 cents a share for the entire year for two years running. If that happens YRCW will continue to trade above $10 a share.
Best case scenario, YRCW gets to $53 in 3+ years.
Most likely scenario, the 2nd quarter earnings report is a loss, it trades down to 12, the 3rd quarter earnings report is a smaller loss, it trades down to 10 and then trades around 10 for a year or more, UNLESS the 1st Q of 2016 is profitable -- which is highly unlikely based upon the experience of the past five years. A positive earnings surprise for the 4th Q of this year could pop the stock to above 20 in February 2016 and a positive earnings surprise fot the 1st Q of 2016 could pop the stock to above 30 in May 2016. Also, if my grandmother had balls, she'd have been my grandfather.
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