FORBES: Don’t Expect Miracles From Universal Technical Institute

Career College Central Summary:

  • Universal Technical Institute (UTI) suffers from unreasonably high valuation and steadily declining enrollment. Bulls focus on UTI’s assets and clean balance sheet but overlook the company’s $142 million in off-balance sheet debt, which is nearly 60% of its market value.
  • With the rise of free community college offerings and increased scrutiny on for-profit colleges, there is little left UTI can do to combat declining demand for its education. Investors should not expect the company’s current buyback and dividend to continue much longer.
  • UTI has struggled in recent years. Its revenue fell by 16% between 2011 and 2013 while operating profit (NOPAT) fell by 65%. UTI’s management blames the company’s issues on the poor economy. On a recent conference call, CEO Kimberly McWaters offered the explanation that “Lingering effects of the great recession have impacted consumer confidence in the job market and made them question the value of an education.”

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