We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Universal Technical (UTI) Up 2.5% Since Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for Universal Technical Institute Inc (UTI - Free Report) . Shares have added about 2.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Universal Technical's Q2 Loss Narrower than Expected
Universal Technical reported narrower-than-expected loss in the second quarter of fiscal 2017. During the quarter, the company made progress in terms of new program offerings, smaller campus initiatives and strategic partnerships. However, student starts continue to be weak. The company has adjusted its marketing strategy and improved student support services. This is expected to improve student starts in the second half.
The company’s adjusted loss of $0.12 per share in the quarter was narrower than the Zacks Consensus Estimate of a loss of $0.16 by 25%. In the year-ago quarter, the company posted loss per share of $1.32.
Revenues & Enrollment
Revenues of $82.5 million in the second quarter fell 6.5% from the prior-year quarter due to a decrease in student enrollment.
The top line, however, excluded revenues of $4.4 million related to the loan program during the quarter. The company intends to include this amount in the forthcoming quarters as students clear their debts.
Universal Technical reported a 10.7% drop in average undergraduate full-time enrollments in the quarter. The decline can be attributed to lower student population and weak student starts. Total starts declined 17.4% in the quarter under review.
Universal Technical’s enrollments have been sluggish for several quarters due to regulatory challenges along with changes and competition in the higher education industry.
Operating Results
Operating expenses reduced 13% or by $12.2 million to $81.8 million on lower compensation expenses and improved operating efficiencies following the implementation of the Financial Improvement Plan.
The company reported operating income of $0.7 million in the quarter as against an operating loss of $5.8 million in the prior-year quarter. The improvement can be attributed to $1 million of operating income from the Long Beach campus and significant cost reduction.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $5.6 million, compared to a loss of $0.6 million in the prior-year quarter.
Financials
The company had cash and cash equivalents and investments of $98.7 million as of Mar 31, 2017, compared with $120.7 million as of Sep 30, 2016. The decrease can be attributed to collateral requirements for surety bonds renewed in the quarter and changes in working capital.
FY17 Guidance
Universal Technical expects new student starts to decline in the high-single digits. The average student population is likely to decline low double digits from the fiscal 2016 level.
Revenues are expected to be down in the mid-to-high single digits in fiscal 2017. Earlier, revenues were anticipated to be down in the mid-single digits.
Universal Technical now expects its Financial Improvement Plan to generate annualized cost savings at the higher end of the $30 million to $40 million range, whereas the plan was earlier expected to deliver over $30 million in annualized cost savings.
Capital expenditures are expected to be approximately $10 million to $11 million for the year ending Sep 30, 2017, compared with $12.5 million to $13.5 million projected earlier.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 6.7% due to these changes.
Universal Technical Institute Inc Price and Consensus
At this time, Universal Technical's stock has a great Growth Score of 'A', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Universal Technical (UTI) Up 2.5% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Universal Technical Institute Inc (UTI - Free Report) . Shares have added about 2.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Universal Technical's Q2 Loss Narrower than Expected
Universal Technical reported narrower-than-expected loss in the second quarter of fiscal 2017. During the quarter, the company made progress in terms of new program offerings, smaller campus initiatives and strategic partnerships. However, student starts continue to be weak. The company has adjusted its marketing strategy and improved student support services. This is expected to improve student starts in the second half.
The company’s adjusted loss of $0.12 per share in the quarter was narrower than the Zacks Consensus Estimate of a loss of $0.16 by 25%. In the year-ago quarter, the company posted loss per share of $1.32.
Revenues & Enrollment
Revenues of $82.5 million in the second quarter fell 6.5% from the prior-year quarter due to a decrease in student enrollment.
The top line, however, excluded revenues of $4.4 million related to the loan program during the quarter. The company intends to include this amount in the forthcoming quarters as students clear their debts.
Universal Technical reported a 10.7% drop in average undergraduate full-time enrollments in the quarter. The decline can be attributed to lower student population and weak student starts. Total starts declined 17.4% in the quarter under review.
Universal Technical’s enrollments have been sluggish for several quarters due to regulatory challenges along with changes and competition in the higher education industry.
Operating Results
Operating expenses reduced 13% or by $12.2 million to $81.8 million on lower compensation expenses and improved operating efficiencies following the implementation of the Financial Improvement Plan.
The company reported operating income of $0.7 million in the quarter as against an operating loss of $5.8 million in the prior-year quarter. The improvement can be attributed to $1 million of operating income from the Long Beach campus and significant cost reduction.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $5.6 million, compared to a loss of $0.6 million in the prior-year quarter.
Financials
The company had cash and cash equivalents and investments of $98.7 million as of Mar 31, 2017, compared with $120.7 million as of Sep 30, 2016. The decrease can be attributed to collateral requirements for surety bonds renewed in the quarter and changes in working capital.
FY17 Guidance
Universal Technical expects new student starts to decline in the high-single digits. The average student population is likely to decline low double digits from the fiscal 2016 level.
Revenues are expected to be down in the mid-to-high single digits in fiscal 2017. Earlier, revenues were anticipated to be down in the mid-single digits.
Universal Technical now expects its Financial Improvement Plan to generate annualized cost savings at the higher end of the $30 million to $40 million range, whereas the plan was earlier expected to deliver over $30 million in annualized cost savings.
Capital expenditures are expected to be approximately $10 million to $11 million for the year ending Sep 30, 2017, compared with $12.5 million to $13.5 million projected earlier.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 6.7% due to these changes.
Universal Technical Institute Inc Price and Consensus
Universal Technical Institute Inc Price and Consensus | Universal Technical Institute Inc Quote
VGM Scores
At this time, Universal Technical's stock has a great Growth Score of 'A', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.