We recently downgraded our rating on
) from Neutral to Underperform following the dismal fourth quarter
top and bottom-line results.
DeVry's fourth quarter 2012 earnings of 47 cents per share
declined 56% from the prior-year quarter due to lower revenues and
higher operating costs. Net sales also fell 7.5% year over year to
$505.9 million, missing the Zacks Consensus Sales Estimate of $510
million due to lower enrollments, lower-than-expected revenue at
its subsidiary Advanced Academics, and increased use of
In late July 2012, DeVry had pre-announced a disappointing
financial outlook for the fourth quarter. It warned that its
revenue and earnings would fall short on both year-on-year and
sequential basis. Finally, the reported results were almost in line
with the lowered guidance. DeVry's share price has gone down
by more than 25% since the pre-announcement. Read our full report
on fourth quarter results at
DeVry's 4Q Falls on Weak Enrollments
In the fourth quarter, DeVry's total postsecondary enrollments
across all its programs were down 3.4% over the prior-year quarter.
The company has been witnessing a persistent decline in enrollments
due to a weak macroeconomic environment and subsequent decline in
student demand (due to the hesitancy over taking a loan). Further,
modifications made to the business to comply with new regulations,
have also been hurting enrollment growth. The competitive landscape
is also intense. Significant accomplishments at DeVry's growing
institutions like Chamberlain, Ross, Becker and DeVry Brasil have
been overshadowed by enrollment declines at institutions in
transition like DeVry University and Carrington.
We believe that though management is trying to improve its
business to regain enrollment growth and control costs, it might
take time for these initiatives to deliver the desired results.
Other than this, a difficult regulatory environment and rising
abuse of student aid also create significant overhangs.
DEVRY INC (DV): Free Stock Analysis Report
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