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.