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Earnings Preview: UTI

by Zacks Equity Research

January 30, 2013 | Comments : 0 Recommended this article: (0)

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Universal Technical Institute, Inc. ( UTI - Analyst Report ) is set to report first quarter fiscal 2013 results on Jan 31. Last quarter, the company posted a negative earnings surprise of 15.4%. Let’s see how things are shaping up for this announcement.

Why the Negative Surprises?

United Technical has missed the Zacks Consensus Estimate in 3 of the last 4 quarters. Estimates have mostly seen a downward trend. In-fact over the last 90 days, the Zacks Consensus Estimate plummeted by 50% for fiscal 2013 and 49% for fiscal 2013, following a dismal performance in the fourth quarter of 2012.

Enrollments at this mechanic training institute have been trending down consistently since the last few quarters as a result of macroeconomic headwinds and continued challenges in obtaining student financing. This is hampering the company’s revenue, margins and cash flows significantly.

No Improvement Expected in the First Quarter

The Zacks Consensus Estimate for the first quarter stands at 8 cents, reflecting a year-over-year decline of 49.1%. The Zacks Consensus Estimate for the first quarter has gone down by almost 39% over the last 90 days, as new student starts are expected to decline yet again in this quarter.

The downward pressure on estimates signals that the first quarter might not be too different from the past few quarters. Moreover, the stock carries a Zacks Rank #4 (Sell).

Universal Technical works closely with leading original equipment manufacturers (OEM) in the automotive, diesel, motorcycle and marine industries such as, Ford Motor Co. ( F - Analyst Report ) , Honda Motor Co., Ltd. ( HMC - Analyst Report ) , Harley Davidson, Inc. ( HOG - Analyst Report ) and many more.

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