Universal Technical Institute (UTI) & Career Education (CECO) Critical Analysis

Universal Technical Institute (NYSE: UTI) and Career Education (NASDAQ:CECO) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Analyst Recommendations

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This is a breakdown of current ratings and recommmendations for Universal Technical Institute and Career 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
Career Education 0 1 0 0 2.00

Universal Technical Institute presently has a consensus target price of $6.00, suggesting a potential upside of 100.67%. Career Education has a consensus target price of $13.00, suggesting a potential upside of 0.00%. Given Universal Technical Institute’s higher possible upside, equities analysts plainly believe Universal Technical Institute is more favorable than Career Education.

Insider & Institutional Ownership

62.7% of Universal Technical Institute shares are owned by institutional investors. Comparatively, 77.4% of Career Education shares are owned by institutional investors. 28.4% of Universal Technical Institute shares are owned by insiders. Comparatively, 5.0% of Career Education shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Universal Technical Institute -2.35% -7.58% -3.73%
Career Education -5.35% 6.73% 4.44%

Earnings & Valuation

This table compares Universal Technical Institute and Career Education’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Universal Technical Institute $324.26 million 0.23 -$8.12 million ($0.51) -5.86
Career Education $596.43 million 1.51 -$31.89 million $0.31 41.94

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

Risk and Volatility

Universal Technical Institute has a beta of 3.17, suggesting that its stock price is 217% more volatile than the S&P 500. Comparatively, Career Education has a beta of 2.73, suggesting that its stock price is 173% more volatile than the S&P 500.

Summary

Career Education beats Universal Technical Institute on 7 of the 12 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 Career Education

Career Education Corporation operates colleges, institutions, and universities that provide education to student population in various career-oriented disciplines through online, campus based, and blended learning programs in the United States. The company operates through three segments: Colorado Technical University (CTU), American InterContinental University (AIU), and All Other Campuses. Its colleges and universities include AIU, CTU, Le Cordon Bleu institutions, Briarcliffe College, Harrington College of Design, and Sanford-Brown College. The company offers doctoral, master's, bachelor's, and associate degrees, as well as diploma and certificate programs. It also provides academic programs in the career-oriented disciplines of business studies, nursing, computer science, engineering, information systems and technologies, cybersecurity, and healthcare management, as well as information technologies, and education and criminal justice; and educational programs in culinary arts, as well as patisserie and baking. As of December 31, 2017, the company had a total student enrollment of approximately 34,800 students. Career Education Corporation was founded in 1994 and is headquartered in Schaumburg, Illinois.

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