KTCC is my longest hold. I've had it since 2011. The promise here is always better than the actual results. This earnings report is enough to keep me in.
The earnings were good, but the guidance for the new acquisition Tea Leaves to reduce EBITDA by $3 million is what is probably knocking the stock down.
I consider the earnings to be good. Revenues were on target. I get non-GAAP earnings of $0.20 when not excluding share based compensation. Share based comp should always be included. That puts the PE ratio under 15 for a company growing over 20% per year. Where else can you find that?
Earnings and revenues close to estimates and much better than Q1. Guiding for profits to return next quarter and 7% margins by year end. They previously were shooting for 6% margins.
The huge earnings beat was done on the back of sustainable cost cuts and improved revenue mix. YRCW is now officially out of the woods and able to focus on growth. Improved cash flow will allow it to update its fleet to more cost efficient trucks. This alone will further drive earnings over the next two years. As cash flow improves this will allow a refi of debt to much lower rates. Expect this within the next year. Meanwhile market cap is only about 13% of revenues, way WAY below the peer median which is over 100%. Huge opportunity for stock appreciation.
I don't get the 13% stock drop so far today. The earnings and revenue miss appear due to an unusual number of flight cancellations due to weather. The core growth is still there.