391781 03: The Deutsche Bank headquarters sign is on display July 11, 2001 in New York City. (Photo by Mario Tama/Getty Images)
As the earnings season roller coaster continues to move, Deutsche Bank analysts are weighing in today on trucking company YRC Worldwide Inc (NASDAQ:YRCW) and engine maker Cummins Inc. (NYSE:CMI), with mixed ratings.
YRC Worldwide Inc
YRC Worldwide has lost nearly a third of its market cap today after reporting fourth quarter and full-year results for 2015. More specifically, the company reported an operating loss of $15.3 million for the fourth quarter, compared to last years operating income of $31.2 million. To the company’s credit, full year operating income more than doubled this year, coming in at $93 million as opposed to $45.5 million a year ago.
Despite the earnings miss, Deutsche Bank analyst Robert Salmon reiterated a Buy rating on shares of YRC Worldwides, with a price target of $16, which implies an upside of 119% from current levels.
Salmon commented, “YRCW reported Q4 adjusted EBITDA of $66.0 million, which was below our estimate of $79.5 million and Consensus of $76.5 million as the company was slow to adjust its cost structure in a weakening demand environment. The miss was largely driven by higher-than-expected SW&B (which included a $5.5 million bonus payment in Regional) and operating expenses and supplies costs. The company reiterated its long-term focus on improving its freight mix, safety, yields, and technology, which it expects to bear fruit in the back half of 2016. Despite the Q4 miss we remain BUY rated given our confidence on the company’s longer term turnaround story.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Robert Salmon has a yearly average return of -10% and a 34.7% success rate. Salmon has a -30% average return when recommending YRCW, and is ranked #3410 out of 3621 analysts.
Overall, the 2 analysts polled by TipRanks remain bullish on YRC Worldwide stock. With a return potential of 146%, the stock’s consensus target price stands at $18.
In addition, Deutsche Bank analyst Vishal Shah reiterated a Hold rating on shares of Cummins, while raising the price target to $93 (from$87), which still implies a downside of 6% from current levels.
Shah noted, “Although the outlook for CMI’s key end markets were slightly worse than expected, the implied 2016 earnings guidance came in above expectations, driven largely by plans for significant cost reduction during the year. On the positive side, CMI remains committed to supporting the share price through a robust capital return program this year. On the negative side, we remain concerned about further market share loss in North America. Against this backdrop, we view the risk/reward as balanced.”
According to TipRanks.com, analyst Vishal Shah has a yearly average return of -19.3% and a 24.6% success rate. Shah has a -10.7% average return when recommending CMI, and is ranked #3593 out of 3621 analysts.