Why Shares of UTi Worldwide Inc. Plunged Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of supply chain services company UTi Worldwide (NASDAQ: UTIW) dropped 16% today after reporting worse-than-expected earnings.

So what: Fiscal fourth-quarter 2015 gross revenues dropped 10% to $964.6 million and net revenues fell 14.5% to $312.2 million. Net loss nearly doubled to $103.9 million, or $1.02 per share.

Management made efforts early in the year to cut costs and to cut working capital that has been higher than the industry average. As a result, they expect $125 million to $150 million in EBITDA in fiscal 2016, which would be a significant jump from the $45.3 million run rate for fiscal 2015.

Now what: UTi's management talked about improvements they're making to the business, but with a full year of losses last fiscal year I would like to see some fundamental improvements before jumping into the stock. There are just too many unknowns about how the strategic changes will impact the business, and even analysts' $0.23-per-share earnings estimate for the current year may be high given recent results. I'm just not interested in buying a company that's losing money in a good economy when there are plenty of profitable options on the market.

The article Why Shares of UTi Worldwide Inc. Plunged Today originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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