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Market Edge® Research Equity Research Report
YRC WORLDWIDE BUY
YRCW-$2.37 · Exchange:NMS August 31, 2009
Recommendation
Opinion BUY Opinion Date 8/31/2009 Current Price 2.37
Opinion Price 2.37 Prior Opinion SELL
Summary:
The financial condition of YRCW needs to improve. This shows up in the large number of negative fundamental
comments. Over the longer term, the company’s fundamentals will need to improve in order to sustain price appreciation.
The stock is fairly valued when compared to other stocks in its industry group but still has the potential for price
appreciation.
YRCW's ability to generate future earnings appears somewhat questionable at this juncture when compared to industry
averages. The company’s long and short term debt ratios are weaker than industry averages signaling an overleveraged
balance sheet. Operating margins declined last quarter but operating cash flow remains positive. Demand for the
company’s products and services needs to show improvement as sales for the last quarter declined -44.63% to $1.33
billion. Looking forward, the analyst consensus forecast for earnings for the next two quarters is expected to show
improvement but revenue are expected to slow.
Price momentum has recently been soft even though the stock has outperformed the market when compared to the S&P
500. As a result of these factors, price appreciation should be limited over the near term. Over the longer term, the
company’s fundamentals will need to improve in order to sustain price appreciation.
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