It has been about a month since the last earnings report for Universal Technical Institute (UTI - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Universal Technical due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Universal Technical Reports Wider-Than-Expected Q3 Loss
Universal Technical reported mixed fiscal third quarter 2018 results. Adjusted loss of 52 cents per share in the fiscal third quarter was wider than the Zacks Consensus Estimate of 48 cents and the year-ago quarter’s 21 cents.
Quarterly revenues of $74.9 million beat the consensus mark of $74 million by 1.2%. However, revenues declined 1.8% from the prior-year quarter due to a 5.1% drop in average student enrollment.
Total starts dropped 12.7% year over year to 1,548 during the quarter.
Operating expenses rose 9.7% to $86.7 million, driven by an increase in contract services, advertising, goodwill and intangible asset impairment expense, compensation and occupancy costs.
Operating loss in the quarter was $11.8 million compared with $2.8 million in the prior-year quarter.
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) were $(7.2) million compared with $2.1 million a year ago.
The company had cash and cash equivalents of nearly $60 million as of Jun 30, 2018, compared with $50.1 million on Sep 30, 2017.
Net cash used in operations came in at $22.4 million in the first nine months of 2018 compared with $29.8 million recorded in the comparable period last year.
Fiscal 2018 Outlook
UTI expects new student starts growth in mid-single digits year over year. The average student population is likely to decline in mid-single digits.
Revenues are expected in the range of $315-$320 million for the fiscal.
Operating expenses are projected in the range of $352-$354 million.
UTI expects to incur operating loss between $32 million and $36 million, as well as projects a negative EBITDA.
Capital expenditures are expected between $23 million and $24 million for the fiscal.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -22.5% due to these changes.
Currently, Universal Technical has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Universal Technical has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.