Breakeven Is Near for Yellow Corporation (NASDAQ:YELL)

By
Simply Wall St
Published
February 24, 2022
NasdaqGS:YELL
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Yellow Corporation's (NASDAQ:YELL) future prospects. Yellow Corporation, through its subsidiaries, provides various transportation services primarily in North America. The US$460m market-cap company announced a latest loss of US$109m on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on Yellow's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Yellow

According to the 2 industry analysts covering Yellow, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$39m in 2022. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 120%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
NasdaqGS:YELL Earnings Per Share Growth February 23rd 2022

Underlying developments driving Yellow's growth isn’t the focus of this broad overview, though, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Yellow currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

This article is not intended to be a comprehensive analysis on Yellow, so if you are interested in understanding the company at a deeper level, take a look at Yellow's company page on Simply Wall St. We've also put together a list of essential aspects you should further research:

  1. Historical Track Record: What has Yellow's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Yellow's board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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