A month has gone by since the last earnings report for Universal Technical Institute (UTI - Free Report) . Shares have added about 31.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Universal Technical due for a pullback? 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 drivers.
Universal Technical’s Q4 Loss In Line, Revenues Miss
Universal Technical Institute, Inc. recently reported fiscal fourth-quarter 2018 results, wherein loss of 49 cents per share was in line with the Zacks Consensus Estimate. However, quarterly revenues of $80.3 million missed the consensus mark of $81.3 million by 1.3%.
Loss incurred during the fiscal fourth quarter was wider than the year-ago level of 8 cents. Also, revenues declined 1.3% from the prior-year quarter, attributable to a 2.1% reduction in average student population.
Nevertheless, total starts rose 8.5% year over year to 6,022 during the quarter. This year-over-year growth was recorded for the first time in eight years.
Operating expenses of $91.3 million grew 10.8% from a year ago due to a rise in compensation and related costs, along with advertising, contract services and student expenses. Operating loss in the quarter was $11.1 million compared with $1.1 million in the prior-year quarter.
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) were $(6.4) million compared with $3.9 million in the year-ago period.
The company had cash and cash equivalents of $58.1 million as of Sep 30, 2018 compared with $50.1 million on Sep 30, 2017.
Net cash used in operations came in at $13.5 million in 2018 compared with $10 million recorded a year ago.
Fiscal 2018 Highlights
Universal Technical incurred fiscal 2018 loss of $1.51 per share, which was in line with the Zacks Consensus Estimate. However, revenues of $317 million missed the consensus mark of $318.1 million by 0.3%.
Revenues in fiscal 2018 decreased 2.3% year over year due to a 4.3% decline in average student population. Loss widened to $1.51 per share from 54 cents in fiscal 2017. Total starts slightly increased to 10,705 from the prior-year level of 10,573.
The company’s operating expenses in fiscal 2018 came in at $352.2 million, up 8% from a year ago. Operating loss was $32.7 million compared with $8.1 million in fiscal 2017.
EBITDA in the fiscal year was $(16.7) million compared with $17.9 million a year ago.
Fiscal 2019 View
Universal Technical expects mid-high single digit new student starts growth across its existing campuses, including the new Bloomfield, NJ campus. The average student population is likely to rise in low-single digits.
Fiscal 2019 revenues are expected in the range of $322-$332 million. Operating expenses are projected in the range of $337-$347 million.
Universal Technical expects to incur operating loss between $10 and $15 million, due to investments in marketing and admissions to support start growth, along with the expansion of its welding program. EBITDA is anticipated in the range of $5-$11 million.
Capital expenditure for fiscal 2019 is likely to be between $8 million and $10 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted 21.43% due to these changes.
Currently, Universal Technical has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending