Universal Technical Institute, Inc.
) is set to report fourth-quarter and fiscal 2013 results on Dec
3. Last quarter, the automotive training school beat the Zacks
Consensus Estimate of breakeven earnings by a penny. Let's see
how things are shaping up for this announcement.
Factors to Consider This Quarter
The company's enrollments have been trending down consistently
over the past few quarters as a result of macroeconomic
headwinds; sluggish demand due to prospective students'
reluctance in taking loans and continued challenges in obtaining
student financing; changing regulatory requirements; increased
price sensitivity and affordability concerns; and increased
competition. The company works closely with leading original
equipment manufacturers in the automotive, diesel, motorcycle and
marine industries such as such as,
Ford Motor Co.
) and many more.
However, new student starts improved sequentially in the third
quarter due to improving demand. Though the macro challenges
continue, the auto/transportation market is rebounding which
combined with the aging workforce is increasing market demand for
skilled auto technicians. Accordingly, the company witnessed
improved student applications in the quarter.
New student starts are expected to grow in the mid-high
single-digit range in the fourth quarter (as inquiries and
applications improve) but remain flat in the first quarter of
Moreover, the company is pushing hard to manage costs and
improve marketing and operating efficiency to counter the
sluggish student enrollment environment. These efforts have led
to sequentially improved profits in the second and third quarters
and are expected to generate further improvement in the fourth
Our proven model does not conclusively show that Universal
Technical is likely to beat earnings this quarter. That is
because a stock needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
The Zacks ESP is 0.00%.
Universal Technical's Zacks Rank #3 (Hold), when combined with
0.00% ESP, makes surprise prediction difficult. We caution
against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks)
going into the earnings announcement, especially when the company
is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies that can be considered as our
model shows that they have the right combination of elements to
post an earnings beat this quarter:
In schools you may consider
), with Earnings ESP of +4.05% and a Zacks Rank #3 (Hold).
In personal services sector you may consider
), with Earnings ESP of +50.0% and a Zacks Rank #3 (Hold).
DEVRY EDUCATION (DV): Free Stock Analysis
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UNIVL TECH INST (UTI): Free Stock Analysis
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