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UTi Worldwide (UTIW) recently reported its sixth 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 No. 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 Sept. 6. Adjusted earnings per share came in at 5 cents, missing the Zacks Consensus Estimate of 14 cents. It was the company's sixth 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 No. 5 (Strong Sell). The Zacks Consensus Estimate for 2014 is now $0.28, down from $0.46 just seven 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:

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 No. 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).

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UTi Worldwide: Free Stock Analysis Report (email registration required)

Source: Bear Of The Day: UTi Worldwide