YRC Worldwide, Inc. (YRCW): A High-Flyer That Is Still Ridiculously Cheap

In addition, the chart above does not take into consideration YRC Worldwide’s acquisition of Arkansas Best, which would make its total revenue almost $7 billion annually. Thus, regardless of how you look at it, YRC Worldwide is very cheap, and with slight operational improvements, it could trade considerably higher.

Final Thoughts

The key with YRC Worldwide is that it’s almost profitable, with positive operating margins. If the company could make minor changes and produce a profit margin of just 1% then it would trade at just five times earnings. Even then the company’s profit margin would be far below its noted competitors above; indicating further room for improvements.

Overall, YRC Worldwide is a troubled company, but one that continues to make improvements. The company must prove that its Q1 earnings reports was not a one hit wander. It must build on these improvements and continue quarter-after-quarter.

Already, the market is rushing to re-value the stock to reflect fundamental improvements, and if they continue, then I see no reason why YRC Worldwide couldn’t be worth at least 0.50 times sales; which would still be a 50% discount to its sector. If so, then we’re talking about a stock that could have 1,000% upside from this point forward. But like I said, improvements must continue to be made, and if so, YRC Worldwide can skyrocket due to it being so cheap relative to its space.

Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends FedEx

The article A High-Flyer That Is Still Ridiculously Cheap originally appeared on Fool.com and is written by Brian Nichols.

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