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Market Sentiment Around Loss-Making Universal Technical Institute, Inc. (NYSE:UTI)

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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$37.9m and a trailing-twelve month of -US$44.5m, the US$86m market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on UTI’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for UTI, its year of breakeven and its implied growth rate.

Check out our latest analysis for Universal Technical Institute

Consensus from the 2 Consumer Services analysts is UTI is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$7.1m in 2020. So, UTI is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which UTI must grow year-on-year. It turns out an average annual growth rate of 80% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:UTI Past and Future Earnings, April 29th 2019

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 typically 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 35% 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 put together a list of key factors you should further research:

  1. Historical Track Record: What has UTI's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. 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.
  3. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.