Here's Why You Should Buy Universal Technical Stock Right Now

Universal Technical Institute, Inc.’s (NYSE:UTI) cost-saving initiatives, focus on smaller campuses and original equipment manufacturers or OEM relationships bode well for its earnings prospects. In fact, loss estimates for fiscal 2018 and 2019 have narrowed over the past 30 days by 39% and 1.5%, respectively.

Meanwhile, shares of the company have gained 7.4% against its industry’s decline of 22.5% in the past six months. In fact, the Zacks Consensus Estimate for fiscal 2018 and 2019 loss has narrowed over the past 30 days by 39% and 1.5%, respectively.



Universal Technical recently reported fiscal fourth-quarter results, wherein loss of 49 cents per share was in line with the Zacks Consensus Estimate. Although the company’s reported loss was wider than the year-ago period, the same narrowed sequentially. Notably, its total starts rose 8.5% year over year for the first time in eight years.

Let’s delve deeper into the factors that substantiate its Zacks Rank #2 (Buy).

Catalysts Driving Growth

Smaller Campus to Drive Growth: The company has taken several initiatives to drive enrollments and return to profitability. Its keen focus on opening smaller commuter-friendly campuses in high-demand locations is one of those initiatives. In fact, during the fiscal third quarter, it opened a new campus in Bloomfield, NJ. Students living and working near these smaller campuses will be benefited.

Marketing Efficiencies: The company has been refining its marketing efficiency by creating higher-quality inquiries using a new media-mix model. The company has shifted its traditional advertising channels to digital as well as local channels that focus on potential students and their families. As a result, its media inquiries in fiscal 2018 grew to 40% from 30% a year ago.

The company’s long-term plan is to rationalize its footprint, effectively transform into smaller commuter-friendly campuses and offer newly-expanded programs to better utilize existing capacity.

Cost-Saving Initiatives: Universal Technical’s cost-saving initiatives bode well for its bottom-line performance. The company has been undertaking several initiatives to reduce expenses. It is working closely with more than 30 leading OEMs to gain a competitive advantage. Universal Technical is a primary provider of manufacturer specific advanced training (MSAT) programs that offer a cost-effective alternative for sourcing, as well as developing technicians for both OEMs and their dealers.

Solid VGM Score: Universal Technical has an impressive VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choices.

Other Stocks to Consider

Other top-ranked stocks from the same industry include K12 Inc. (NYSE:LRN) , Bright Horizons Family Solutions Inc. (NYSE:BFAM) and Adtalem Global Education Inc. (NYSE:ATGE) . While K12 sports a Zacks Rank #1 (Strong Buy), Bright Horizons and Adtalem both carry a Zacks Rank #2. You can the complete list of today’s Zacks #1 Rank stocks here.

K12’s earnings per share are expected to increase 11.8% in 2018.

Bright Horizons is expected to record an EPS growth rate of 17.1% this year.

Adtalem has an expected earnings growth rate of 2.5% for the current year.

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K12 Inc (LRN): Free Stock Analysis Report

Universal Technical Institute Inc (UTI): Free Stock Analysis Report

Bright Horizons Family Solutions Inc. (BFAM): Free Stock Analysis Report

Adtalem Global Education Inc. (ATGE): Free Stock Analysis Report

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