On Mar 10, 2014, we issued an updated research report on
DeVry Education Group Inc.
DeVry turned around from a weak first quarter by beating the
Zacks Consensus Estimate for both revenues and earnings in the
second quarter of fiscal 2014. The second quarter results were
announced on Feb 4. However, both revenues and earnings declined
year over year as strong growth in the healthcare and
international businesses was offset by yet another revenue
decline at the struggling flagship DeVry University due to
DeVry has been witnessing persistent enrollment declines,
mainly at DeVry University, as a result of overall economic
downturn and lack of student confidence which has reduced
However, though enrollments have been declining, the rate of
decline is narrowing due to management's turnaround plan that
includes new scholarship programs and other operational
initiatives (like a tuition freeze for 2013-2014 and strategic
use of scholarships). Further, management expects starts to
improve at DeVry University in March.
DeVry's diversified portfolio of programs, regular strategic
acquisitions and a debt-free balance sheet give it a competitive
advantage. The company is also witnessing continued strength in
its health care and international businesses. Moreover, the
performance improvement plan to align costs, regain enrollment
growth and make growth investments is yielding positive
However, the company needs to show a sustained enrollment
growth at DeVry University, accounting for 50% of revenues; not
expected at least in 2014. The continued challenged regulatory
environment also remains a persistent overhang.
Key Picks from the Sector
DeVry carries a Zacks Rank #3 (Hold). Other better-ranked
stocks in the education sector include
Strayer Education Inc.
Apollo Education Group, Inc.
TAL Education Group
). All the three stocks enjoy a Zacks Rank #1 (Strong Buy).
APOLLO GROUP (APOL): Free Stock Analysis
DEVRY EDUCATION (DV): Free Stock Analysis
STRAYER EDUC (STRA): Free Stock Analysis
TAL EDUCATN-ADR (XRS): Free Stock Analysis
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