Market Sentiment Around Loss-Making Universal Technical Institute Inc (NYSE:UTI)
Universal Technical Institute Inc’s (NYSE:UTI): Universal Technical Institute, Inc. provides postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle, and marine technicians in the United States. With the latest financial year loss of -US$13m and a trailing-twelve month of -US$28m, the US$69m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is UTI’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for UTI’s growth and when analysts expect the company to become profitable.
View our latest analysis for Universal Technical Institute
Expectation from Consumer Services analysts is UTI is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$10m in 2021. So, UTI is predicted to breakeven approximately a few months from now. How fast will UTI have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 59% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, UTI may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for UTI given that this is a high-level summary, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one aspect worth mentioning. UTI has managed its capital prudently, with debt making up 31% of equity. This means that UTI has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of UTI which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at UTI, take a look at UTI’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further research:
Valuation: What is UTI worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether UTI is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Universal Technical Institute’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
