YRC Worldwide Inc (YRCW)

[MagicCap]

Keep in mind that pre-crisis when the company was horribly managed they were doing $200 to $300 Million in net income. Revenues were a good deal higher, but the company was losing money in several divisions that YRC has sold off since so a lot of those revenues were unprofitable. The company is now managed much better and I believe they will return to this level of profitability within 3 to 4 years. All they are focused on right now is getting everything in their operations run efficiently and putting systems in place to operate flawlessly. After everything is in place they will focus on profitable revenue growth and when that happens what do you think the market will value the stock at? Even if you include the fully diluted shares of 21 million shares, it could be worth $100 to $150 a share on earnings of $100 Million (i.e., $100 Million net income x 20 p/e = $2 Billion divided by 21 million shares = approx $100/share).

First things first, though, they should return to positive net income by Q2/Q3 and I think the stock will trade in the mid teens by then. So long as they continue to show improvement in operating ratios in both segments, Freight and Regional, the stock is a huge buy. Probably one of the best investments in the market right now. They have a lot of negatives, for sure. Debt is high, pension obligations are an issue. However, they have the next 2 years to return to profitability and continue to improve their freight division before their next big debt payments are due. They have stated in their 10k that they have plenty of liquidity for the foreseeable future so it just comes down to continuing to perform.