YRC Worldwide shares fall after big earnings miss

Fri Apr 27, 2007 10:10am EDT

CHICAGO, April 27 (Reuters) - YRC Worldwide Inc. (YRCW.O) shares fell more than 5 percent on Friday after the trucking company's first-quarter results came in far below Wall Street's expectations.

After the stock market closed on Thursday, the largest U.S. less-than-truckload company reported earnings of 20 cents a share before one-time items. Analysts on average were expecting 40 cents, according to Reuters Estimates.

Less-than-truckload operators consolidate small loads into a single truck.

YRC blamed the shortfall on a slowing U.S. economy and harsh winter weather.

"Old man winter was particularly harsh on YRCW," Prudential Equity Group analyst Lee Klaskow wrote in a research note.

Prudential lowered its share-price target to $36 from $39 and reiterated its "underweight" rating on the stock.

YRC shares were down $2.44, or 5.3 percent, at $43.30 in morning Nasdaq trade.

The company, which is unionized, said the weather had brought additional labor costs and had resulted in lost revenue, reducing earnings by 17 cents a share.

In a research note, Bear Stearns analyst Edward Wolfe described YRC's earnings report as "disastrous."

Wolfe took issue with the company's claimed one-time "reorganization" costs for acquisitions now two and four years old.

"Since these costs continue every quarter, they are on-going," Wolfe wrote.

"The less-than-truckload tonnage environment is challenging," he added. "Beyond that, we believe YRCW has major company-specific risk around its financial reporting and results."

Bear Stearns reiterated its "underperform" rating on YRC stock.

Robert W. Baird & Co. analyst Jon Langenfeld wrote in a research note that YRC's results suffered because of a difficult operating environment.

"However, (the) shortfall also underscores YRCW's execution risk amid difficult freight economy, management turnover and organizational realignment," he wrote.

"Until signs of better execution or an improving environment emerges, we recommend investors avoid the stock," he added.

Baird reiterated its "underperform" rating on the shares.

((Reporting by Nick Carey, editing by Lisa Von Ahn; nick.carey@reuters.com; +1-312-408-8756)) Keywords: YRC SHARES/

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