This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
|Zacks Rank||Definition||Annualized Return|
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Consensus estimates have fallen significantly since the latest negative surprise, sending the stock to a Zacks Rank #5 (Strong Sell).
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 year.
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 Recommendation.
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 turns around.