Is Recent IPO UTime a Good Buy?

: UTME | UTime Ltd. News, Ratings, and Charts

UTME – Chinese electronics manufacturer United Time Technology’s (UTME) stellar market debut took investors by storm as the stock witnessed quadruple gains. However, does the company’s financials and growth potential support such price gains amid an ongoing tech sell-off? Read more to find out.

Chinese mobile and electronic accessory manufacturer United Time Technology Co. Ltd. (UTME) made its U.S. stock market debut on April 6. The company listed 3.75 million ADRs on the Nasdaq Global Select Market, raising $15 million.  The stock opened its first trading session at $11, 175% higher than its $4 IPO price.

UTME shares  soared 2,583.3% from its IPO price in its first trading session to hit an all-time high of $107.33. The stock had an average trading volume of 14.31 million in the first trading session.

However, the company has been losing momentum gradually since, declining 24% so far.  So, here’s what we think could drive UTME’s performance in the near term:

Smartphone Market

The demand for cell phones and electronic gadgets has been high and rising since the onset of the COVID-19 pandemic, given their  roles in sustaining remote lifestyles. And while the advent of the 5G network standard has increased the demand for upgraded, state-of-the-art devices to support the next-generation network, a global semiconductor shortage has limited the industry’s growth potential.

According to a recent IDC report, smartphone shipments are expected to rise 13.9% year-over-year in the first quarter, ending April 2021, and 5.5% in the fiscal year 2021. However, the rising cost of raw materials and production are expected to maintain pressure on companies’ revenues and earnings.

Liquidity Risk

UTME is bleeding cash from its operations. The company’s trailing-12-month net operating cash flow and levered free cash flow stood at negative $1.33 million and $174,810, respectively. It has a cash balance of $113,250. However, with total debt of $3.68 million, UTME does not have sufficient cash flows to cover its debt and interest repayments. Its trailing-12-month debt/free cash flow ratio is negative 14.15. It has a covered ratio of 0.59, indicating poor working capital management.

Low Profitability

UTME’s trailing-12-month gross profit margin of 11.48% is 76.4% lower than the industry average of 48.6%. It’s trailing-12-month EBITDA margin of 1.43% is 89.7% lower than the industry average of 13.83%. Additionally, the company’s net income margin and levered free cash flow margin are negative.

Its negative ROE, ROA and ROTC values are significantly lower than the respective industry averages.

Premium Valuation

In terms of trailing-12-month EV/EBITDA, UTME is currently trading at 539.09x, which is significantly higher than the industry average  21.86x. The stock’s trailing-12-month EV/sales ratio of 7.70 is 66.8% higher than the industry average  4.62.

Also, the company’s 24.46 trailing-12-month price/book multiple is significantly higher than the industry average of 4.93.

Unfavorable POWR Ratings

UTME has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

UTME has a grade of F for Quality, and D for Value. The company’s higher-than-industry valuation and negative return on sales justify these grades.

Of the 71 stocks in the C-rated Consumer Goods industry, UTME is ranked #64. In total, we rate UTME on eight different levels. In addition to the grades highlighted, one can view UTME Ratings for Momentum, Stability, Sentiment, and Growth here.

There are 15 stocks in the Consumer Goods industry with an overall rating of A or B. Click here to view them.

Bottom Line

UTME looks extremely overvalued at its current price level considering its negative profitability and earnings. Many Wall Street analysts are comparing the stock’s  price gains  to the valuations seen in the dot-com era. Thus, the stock is best avoided now.

Click here to checkout our 5G Industry Report for 2021


UTME shares were unchanged in after-hours trading Thursday. Year-to-date, UTME has declined -7.82%, versus a 10.63% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
UTMEGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Top 10 Value Stocks

The S&P 500 (SPY) has shown mixed results in the last week, but if you are a value investor, then yesterday was a big day. That’s when we revealed to our readers the fatal flaws of traditional value investing and the solution to this problem—our Top 10 Value Stocks strategy. Read on below to find out more about this 3-step process and its +38.63% annual returns…

:  |  News, Ratings, and Charts

4 Top-Rated Tech Stocks to Enhance Your Portfolio

The investor rotation away from technology stocks is expected to be short-lived owing to the unabated demand for advanced technology products and services. Therefore, we think some of the biggest names in the tech industry, specifically Intel (INTC), International Business Machines Corporation (IBM), Panasonic (PCRFY), and Canon (CAJ) are solid bets at their current price levels. Read on for an explanation.

:  |  News, Ratings, and Charts

2 Casino Stocks Wall Street Loves

The easing of pandemic distancing restrictions facilitated by mass vaccinations is allowing casinos and related entertainment companies to reopen at 40-50% capacity. This, coupled with the rising popularity of online gambling, is fostering optimism among Wall Street analysts about the upside potential of Penn National Gaming (PENN) and Melco Resorts & Entertainment (MLCO). Read on.

:  |  News, Ratings, and Charts

4 Buy-Rated Financial Stocks to Snatch Up in May

Financial sector stocks have been making an impressive comeback in lockstep with the economy’s recovery. So, we think investing in the stocks of fundamentally sound Goldman Sachs (GS), Lazard (LAZ), Piper Sandler (PIPR), and Cowen (COWN) could pay off handsomely in the near term.

:  |  News, Ratings, and Charts

2 Casino Stocks Wall Street Loves

The easing of pandemic distancing restrictions facilitated by mass vaccinations is allowing casinos and related entertainment companies to reopen at 40-50% capacity. This, coupled with the rising popularity of online gambling, is fostering optimism among Wall Street analysts about the upside potential of Penn National Gaming (PENN) and Melco Resorts & Entertainment (MLCO). Read on.

Read More Stories

More UTime Ltd. (UTME) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All UTME News