Franklin Covey (NYSE: FC) and Universal Technical Institute (NYSE:UTI) are both small-cap business services companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitabiliy, risk, dividends, institutional ownership and valuation.

Institutional and Insider Ownership

53.6% of Franklin Covey shares are held by institutional investors. Comparatively, 60.0% of Universal Technical Institute shares are held by institutional investors. 33.5% of Franklin Covey shares are held by insiders. Comparatively, 13.3% of Universal Technical Institute shares are held 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.

Valuation & Earnings

This table compares Franklin Covey and Universal Technical Institute’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Franklin Covey $190.57 million 1.37 $7.17 million ($0.31) -60.64
Universal Technical Institute $335.86 million 0.27 $9.65 million ($0.87) -4.16

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

Risk & Volatility

Franklin Covey has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Universal Technical Institute has a beta of 3.52, suggesting that its share price is 252% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Franklin Covey and Universal Technical Institute, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franklin Covey 0 2 1 0 2.33
Universal Technical Institute 0 0 0 0 N/A

Franklin Covey presently has a consensus target price of $22.00, indicating a potential upside of 17.02%. Given Franklin Covey’s higher possible upside, analysts plainly believe Franklin Covey is more favorable than Universal Technical Institute.

Profitability

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

Net Margins Return on Equity Return on Assets
Franklin Covey -2.15% -2.02% -0.99%
Universal Technical Institute -5.12% -6.91% -3.33%

Summary

Franklin Covey beats Universal Technical Institute on 8 of the 12 factors compared between the two stocks.

Franklin Covey Company Profile

Franklin Covey Co. is a global company specializing in performance improvement. The Company’s segments are Direct Offices, Strategic Markets, Education practice and International Licensees. The Direct Offices segment consists of its geographic sales offices that serve the United States and Canada, its international sales offices located in Japan, the United Kingdom and Australia, and its public programs group. The Strategic Markets segment includes its government services office, the Sales Performance practice, the Customer Loyalty practice, and a new Global 50 group, which is specifically focused on sales to large, multi-national organizations. The Education practice segment consists of its domestic and international Education practice operations, which are centered on sales to educational institutions, such as elementary schools, high schools, and colleges and universities. The International Licensees segment consists of its international licensees’ royalty revenues.

Universal Technical Institute Company Profile

Universal Technical Institute, Inc. is a provider of postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians as measured by total average undergraduate full-time enrollment and graduates. The Company offers undergraduate degree or diploma programs at approximately 12 campuses across the United States under the banner of various brands, including Universal Technical Institute (UTI), Motorcycle Mechanics Institute and Marine Mechanics Institute (collectively, MMI) and NASCAR Technical Institute (NASCAR Tech). The Company also offers manufacturer specific advanced training (MSAT) programs, including student-paid electives, at its campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers. UTI offers automotive, diesel and industrial, and collision repair and refinishing programs.

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