Critical Analysis: Universal Technical Institute (UTI) and Strayer Education (STRA)

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Universal Technical Institute (NYSE: UTI) and Strayer Education (NASDAQ:STRA) are both small-cap consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, profitability, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Universal Technical Institute and Strayer Education, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal Technical Institute 0 1 0 0 2.00
Strayer Education 0 0 3 0 3.00

Universal Technical Institute currently has a consensus target price of $6.00, indicating a potential upside of 88.09%. Strayer Education has a consensus target price of $108.67, indicating a potential downside of 3.25%. Given Universal Technical Institute’s higher probable upside, research analysts clearly believe Universal Technical Institute is more favorable than Strayer Education.

Dividends

Strayer Education pays an annual dividend of $1.00 per share and has a dividend yield of 0.9%. Universal Technical Institute does not pay a dividend. Strayer Education pays out 32.2% of its earnings in the form of a dividend.

Profitability

This table compares Universal Technical Institute and Strayer Education’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal Technical Institute -4.58% -12.34% -6.17%
Strayer Education 4.27% 18.90% 12.39%

Valuation and Earnings

This table compares Universal Technical Institute and Strayer Education’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Universal Technical Institute $324.26 million 0.25 -$8.12 million ($0.51) -6.25
Strayer Education $454.85 million 2.79 $20.61 million $3.11 36.12

Strayer Education has higher revenue and earnings than Universal Technical Institute. Universal Technical Institute is trading at a lower price-to-earnings ratio than Strayer Education, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

63.3% of Universal Technical Institute shares are owned by institutional investors. Comparatively, 98.1% of Strayer Education shares are owned by institutional investors. 13.3% of Universal Technical Institute shares are owned by insiders. Comparatively, 6.7% of Strayer Education shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Universal Technical Institute has a beta of 3.17, meaning that its stock price is 217% more volatile than the S&P 500. Comparatively, Strayer Education has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500.

Summary

Strayer Education beats Universal Technical Institute on 12 of the 16 factors compared between the two stocks.

About Universal Technical Institute

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. The company offers undergraduate degree and diploma programs, and specialized technical education programs through its 12 campuses under various brands, such as Universal Technical Institute, Motorcycle Mechanics Institute and Marine Mechanics Institute, and NASCAR Technical Institute. It also provides manufacturer specific advanced training programs, including student paid electives at its campuses; and manufacturer or dealer sponsored training at various campuses and dedicated training centers, as well as offers undergraduate diploma programs for welding and computer numerical control machining. The company was founded in 1965 and is headquartered in Scottsdale, Arizona.

About Strayer Education

Strayer Education, Inc., through its subsidiaries, provides a range of post-secondary education and other academic programs in the United States. The company operates Strayer University that provides undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, nursing, public administration, and criminal justice to working adult students through its 74 physical campuses primarily located in the Mid-Atlantic and Southern regions, as well as through online. It also offers an executive MBA online through its Jack Welch Management Institute. In addition, the company operates New York Code and Design Academy that provides non-degree courses in Web and application software development primarily through its campus in New York City. Strayer Education, Inc. was founded in 1892 and is headquartered in Herndon, Virginia.

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