Bear of the Day: UTi Worldwide (UTIW) - Bear of the Day
12 September 2013 - 12:30PM
Zacks
UTi Worldwide (UTIW) recently reported its 6th consecutive
earnings miss as revenues fell -5% year-over-year. Analysts have
revised their estimates significantly lower after the latest miss,
sending the stock to a Zacks Rank #5 (Strong Sell).
Although shares of UTi Worldwide have fallen
considerably since the Q2 report, the stock still does not look
like a value at 23x forward earnings. Investors should consider
avoiding the stock until its earnings momentum turns around.
UTi Worldwide Inc. provides supply chain services
and solutions around the globe.
Second Quarter Results
UTi Worldwide reported disappointing results for
the second quarter of its fiscal 2014 on September 6. Adjusted
earnings per share came in at 5 cents, missing the Zacks Consensus
Estimate of 14 cents. It was the company's 6th consecutive earnings
miss.
Revenues declined -5% to $1.129 billion, below the
consensus of $1.155 billion. Net revenues (revenues minus purchased
transportation costs) also fell -5%. The decline in revenues was
driven in part to ongoing competitive pressures in freight
forwarding.
Estimates Falling
Following the second quarter earnings miss,
analysts have been lowering their estimates for both 2014 and 2015,
which has sent the stock to a Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for 2014 is now $0.28,
down from $0.46 just 7 days ago. The 2015 consensus is currently
$0.67, down from $0.80 over the same period.
You can see the drop in consensus estimates in the
following chart:
![](http://staticzacks.net/images/zacks/blogs/1378931690_scaled_425.jpg)
Premium Valuation
Shares of UTi Worldwide are down more than -11%
since the Q2 earnings report. Despite this, the stock doesn't look
like a value here. Shares currently trade around 23x 12-month
forward earnings (assuming those estimates don't fall any further),
which is a premium to the industry median 20x.
The Bottom Line
With falling earnings estimates and premium
valuation, investors should consider avoiding this Zacks Rank #5
(Strong Sell) stock until its earnings momentum turns around.
Investors still interested in the 'Transportation -
Services' industry may want to take a look at Expeditors
International (EXPD) instead, which carries a Zacks Rank of 2
(Buy).
Todd Bunton, CFA is the Growth & Income
Stock Strategist for Zacks Investment Research and Editor of the
Income Plus Investor service.
EXPEDITORS INTL (EXPD): Free Stock Analysis Report
UTI WORLDWIDE (UTIW): Free Stock Analysis Report
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