UTi Worldwide Inc.
) recently reported a big earnings miss for its fiscal 2013 fourth
quarter. It was the company's fourth straight earnings miss.
Consensus estimates have fallen significantly since the latest
negative surprise, sending the stock to a Zacks Rank #5 (Strong
The valuation picture doesn't look much brighter either. Shares
trade at a premium to the industry on both a price/earnings and
price/cash flow basis.
UTi Worldwide Inc. provides supply chain services and solutions
around the globe.
Big Fourth Quarter Miss
On March 28, UTi Worldwide reported disappointing fourth quarter
results for its fiscal 2013. Earnings per share came in at -$0.13,
missing the Zacks Consensus Estimate of +$0.14 by a wide margin. It
was also a significant decline from +$0.15 in the same quarter last
Revenues declined 5% to $1.099 billion, driven by an -11% decline
in the 'Airfreight Forwarding' segment, which is UTi's largest. The
company attributed this to a
"challenging pricing environment"
Following the company's fourth consecutive earnings miss, analysts
revised their estimates significantly lower for both 2014 and 2015.
This sent the stock to a Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for 2014 is now $0.57, down from $0.79
just 30 days ago. The 2015 consensus has fallen from $0.84 to $0.97
over the same period.
You can see this negative earnings momentum in the company's 'Price
& Consensus' chart:
UTi Worldwide also carries a long-term 'Underperform' Zacks
Based on a forward price/earnings ratio, UTi Worldwide trades at a
premium to the industry. Shares currently trade at 21.9x 12-month
forward earnings, well ahead of the industry median of 15.5x.
Its prices to cash flow ratio of 25.9 is also well above the
industry median of 9.0.
The Bottom Line
With premium valuation and falling earnings estimates, investors
should consider avoiding UTi Worldwide until its earnings momentum
Todd Bunton is the Growth & Income Stock Strategist for
and Editor of the
Income Plus Investor service
UTI WORLDWIDE (UTIW): Free Stock Analysis
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