Why UTi Worldwide (UTIW) Stock Is Down Today

NEW YORK (TheStreet) -- UTi Worldwide  (UTIW) fell 9.68% to $10.17 at 10:56 a.m. on Monday after the logistics company posted a greater-than-expected loss in its fourth-quarter results.

The company posted an adjusted loss of 15 cents a share, while revenue fell 2.1% to $1.08 billion. Analysts polled by Thomson Reuters expected an adjusted loss of 11 cents a share on revenue of $1.09 billion.

Demand for air freight has decreased as customers have started to choose slower and cheaper shipping methods. The International Air Transport Association notes air freight volumes fell 0.4% in North America last year. 

Net loss narrowed to $50.7 million, or 48 cents a share, from $142.8 million, or $1.38 per share, in the same period one year earlier.

The company said in its statement it is not concerned about continuing operations because it raised approximately $725 million to refinance debt; at least $400 million of that could come due in April. The company said in February it had breached some debt covenants.

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TheStreet Ratings team rates UTI WORLDWIDE INC as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate UTI WORLDWIDE INC (UTIW) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Air Freight & Logistics industry. The net income has significantly decreased by 186.0% when compared to the same quarter one year ago, falling from $10.55 million to -$9.08 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Air Freight & Logistics industry and the overall market, UTI WORLDWIDE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for UTI WORLDWIDE INC is currently lower than what is desirable, coming in at 34.09%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.78% trails that of the industry average.
  • The share price of UTI WORLDWIDE INC has not done very well: it is down 24.67% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • UTI WORLDWIDE INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, UTI WORLDWIDE INC swung to a loss, reporting -$0.98 versus $0.70 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$0.98).
  • You can view the full analysis from the report here: UTIW Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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