Is the Economy as Bad as YRCW Says?

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 US 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%.

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 their customers are.  Two of YRCW's largest customers are Wal-Mart (WMT) and Home Depot (HD), which are two companies that haven't exactly been pillars of strength over the last few years.

   

Comments

[Terry Cook]

Well YRC is also putting people in top managment positions the same way politicians do whether they are capable of doing the job or not. It doesent matter if the company makes money, only if the good old boys take care of one and another.