Replies to post #20858 on YRC Worldwide Inc (YRCW)

[GuyBig]

2nd Q 2014 Earnings Expectations & The Additional Short Positions

YRCW -- Shorting Into Strength Leads To Short Covering Rallies

Post #20651

As of July 22, 2014, I still think pretty much the same as what I wrote on June 20, 2014. I reread what I wrote and listened to the CFO's presentation at the Deutsche Bank conference a second time. The presentation was positive.

The pricing environment for truckers has been good in the 2nd Q. Most to the trucking firms and rails that have already reported their earnings did well. YRCW has (nearly) the highest potential operating leverage of any publicly traded transportation firm in the USA. YRCW has the capacity to produce a huge positive earnings surprise this quarter -- not the 9 cents consensus but $7 million net earnings after taxes, 22 cents a share -- although that is highly unlikely. Possible, tho. If everything goes right, that could happen. If it does, the stock could have a gap opening on August 1 ABOVE the July 2013 high of 36.99 -- opening at above 37.

The conference call on July 31 is likely to be extremely positive, no matter what the earnings report.

The additional shorting was done by persons who expect YRCW to report a negative earnings surprise like YRCW has done nearly every quarter for more than five years, but for the first quarter of 2013.

Everything points towards YRCW reporting positive net earnings per share. The consensus estimate according to earningswhispers.com is 9 cents a share. It was 4 cents a share a month or two ago.

I think YRCW will have positive net earnings per share, after taxes, but will come in below the earingswhispers estimate. I have great faith in YRCW's ability to come through with lousy performance and to produce losses where and when profits should be produced. I think YRCW will end up purchasing transportation at top dollar rates to make good on guaranteed deliveries, instead of replacing high internal costs with cheaper outside purchases. I hope I am wrong about that. My guess is that YRCW will have earnings but the earnings will only be about 2 cents a share.

The shorts will end up making money, but they will have to be very quick to cover. The maximum downside will be to 22 or maybe 18. Then YRCW will resume moving back up to where it is now around 28, but shorts will use that move up to COVER their positions, NOT to ADD.