Universal Technical Institute

Universal Technical Institute, Inc. (UTI - Analyst Report) posted another earnings surprise on growing student population and analysts are expecting solid growth.

Company Description

Universal is a for-profit post-secondary educator specializing in automotive, marine, and motorcycle technical careers. Currently the company operates 10 campuses across the U.S.

Enrolment Jumps

The company's fourth-quarter results, released on Dec 1, showed a 15% increase in enrolment. This lead to net income of $7.6 million, well above last year's $0.6 million.

Earnings per share came out to 32 cents per share, up from 2 cents in the same period last year. The Zacks Consensus Estimate was just 19 cents heading into the report, making it the second consecutive surprise.

Optimistic CEO

Kimberly McWaters, president and CEO, said, "This solid performance provides a great beginning for 2010 with 2,300 more students in school than a year ago. Increasing utilization rates and continued focus on cost management should drive meaningful improvement to the bottom line in 2010."

Estimates Rising

Since the announcement, we have seen 6 upward revisions for the current fiscal year, which just began. The Zacks Consensus Estimate is now 85 cents, up from 78 cents.

Next year's estimates are averaging $1.20. These levels represent year-over-year growth of 77% and 41%, respectively.

Valuations

Currently valuations are a bit steep, with a PEG of 1.7 times and a forward P/E coming in at 22 times. However, keep an eye on the incoming earnings estimates.

The Chart

Shares have come off of their 52-week high, but since regained their momentum. After the latest earnings release and bullish MACD, look for the stock to head back up and pressure its high. Take a look at the chart below.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service

Read the full analyst report on UTI