Is Universal Technical Institute, Inc. (NYSE:UTI) Potentially Undervalued?

While Universal Technical Institute, Inc. (NYSE:UTI) might not have the largest market cap around , it saw significant share price movement during recent months on the NYSE, rising to highs of US$16.20 and falling to the lows of US$14.12. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Universal Technical Institute's current trading price of US$15.51 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Universal Technical Institute’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Universal Technical Institute

What Is Universal Technical Institute Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 4.07% above our intrinsic value, which means if you buy Universal Technical Institute today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $14.90, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Universal Technical Institute’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Universal Technical Institute look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In Universal Technical Institute's case, its earnings over the next year are expected to double, indicating an incredibly optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

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 an eye on UTI, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, Universal Technical Institute has 2 warning signs (and 1 which is significant) we think you should know about.

If you are no longer interested in Universal Technical Institute, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.