YRC Worldwide and a Healthy Economy: Where's the Connection?

It seems there isn't a day that goes by lately where the CEO of YRC Worldwide (YRCW) isn't interviewed on TV talking about how bad the economy is right now. Given that YRCW is a trucking company, the CEO's comments are usually given extra weight since performance in the transportation sector is often considered a leading indicator of the overall economy. We took a look at YRCW's price chart over the last few years, and compared it to the index of U.S. Industrial Production. Judging by the chart below, YRCW has not been a very good indicator of the overall economy. Since the stock of YRCW peaked in March 2005, Industrial Production has actually risen by 8%.

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So why has YRCW had such a dismal performance while the expansion continues? Some have attributed the weakness to two acquisitions the company announced between December 2003 and February 2005. But another possible reason for the company's weakness may have to do with who its customers are. Two of YRCW's largest customers are Wal-Mart (WMT) and Home Depot (HD), which are another two companies that haven't exactly been pillars of strength over the last few years.

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Comments

[Mike Holtzer:]

You make a good point, but there is more to why YRCW has struggled. Their regional group's contribution has gradually declined to the point where they are losing money. We should applaud the recent changes in management/structure as it pertains to the regionals (even though is was long overdue). The next obvious step is to change out the leadership at USF Reddaway & USF Holland and insert individuals capable of turning those "once great" brands around. I know many of the employees at both organizations and they would like to see some stronger, more intelligent leadership.

2007 Nov 02 02:03 PM

[David F. Co...:]

roadway in chicago heights, downsized when yellow took over. and some bad decisions were made they let all their most talented people go!!!!!!!!!! keeping the weakest player`s and their stock performance shows this............

2007 Nov 02 08:27 PM

[David F. Co...:]

roadway in chicago heights, downsized when yellow took over. and some bad decisions were made they let all their most talented people go!!!!!!!!!! keeping the weakest player`s and their stock performance shows this............

2007 Nov 02 08:27 PM

[lefty:]

The answer is simple!
Walmart has a history of dictating to both supplier and transporters.
Now look at fuel prices and driver incentives in your time frame.
Can they pass them on?

2007 Nov 04 05:46 AM

[User 127274:]

well you was wrong with the head on collision part with the teamsters contract...

2007 Dec 30 12:28 PM

[User 127274:]

thats pretty good if all four YRCW holding company's are in the dock at the same place at the same time,all picking up freight...they own the market at store ;)

2007 Dec 30 12:33 PM