On Feb 26, 2014,
DeVry Education Group Inc.
) reached a 52-week high of $42.34 as the share price has been
going up ever since it reported strong second-quarter fiscal 2014
results earlier this month. DeVry carries a Zacks Rank #3
Share Price Drivers
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. Enrollments improved and costs
declined from the first-quarter levels.
Earnings, however, declined 9.0% from the prior-year quarter
as revenues went down 1.9% year over year. Though revenues at the
flagship DeVry University, which accounts for half of the
company's revenues, continued to decline, the healthcare,
professional and international businesses remained strong.
DeVry's healthcare and international institutions have shown
significant improvement in revenues and profitability in all the
quarters of fiscal 2013.
The company's total post-secondary enrollments across all its
programs were down 2.6% in the second quarter. However, the
enrollment decline was narrower than 4.4% reported in the first
Moreover, despite a slight year-over-year increase, costs
declined sequentially, pushing up profits.
The company is following a strict cost-control routine and is
particularly looking to combat escalating costs at transition
institutions like DeVry University and Carrington Colleges.
Management expects costs at these transition institutions to
decrease by a further $75 million from the fiscal 2013 levels,
higher than prior expectations of $60 million.
Overall, the education sector is seeing positive momentum
after President Obama expanded federal support to help more
students afford a college education.
The President has doubled the Federal investments in Pell
Grants, a federal student financial aid usually awarded to
undergraduate students. Moreover, the President announced reforms
to help students manage their loans better. Beginning the end of
this year, students will be given an option to cap repayment of
student loans at 10% of their monthly income. This is aimed to
reduce the burden of student loans.
In addition, President Obama has succeeded in keeping interest
rates on Federal student loans low for this school year.
More than 100 colleges and 40 organizations have joined the
cause to help more people graduate from college.
The administration's campaign to encourage low-income students
to attend college comes as a boon to post-secondary education
providers like DeVry,
Strayer Education Inc.
Apollo Education Group, Inc.
American Public Education, Inc.
) and many more.
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