Is Now The Time To Look At Buying Universal Technical Institute, Inc. (NYSE:UTI)?

While Universal Technical Institute, Inc. (NYSE:UTI) might not have the largest market cap around , it saw a decent share price growth of 11% on the NYSE over the last few months. The recent share price gains has brought the company back closer to its yearly peak. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Universal Technical Institute’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

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What's The Opportunity In Universal Technical Institute?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 10% below our intrinsic value, which means if you buy Universal Technical Institute today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $31.13, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Universal Technical Institute’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

See our latest analysis for Universal Technical Institute

What kind of growth will Universal Technical Institute generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 19% over the next couple of years, the outlook is positive for Universal Technical Institute. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in UTI’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on UTI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Universal Technical Institute at this point in time. While conducting our analysis, we found that Universal Technical Institute has 1 warning sign and it would be unwise to ignore this.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.