ITT Educational Services Inc
) loss of 49 cents per share in the fourth quarter of 2013 was
way behind the Zacks Consensus Estimate of earnings of $1.08 per
share. The loss widened from the year-ago quarter loss of
41 cents per share. Double-digit decline in revenues and margin
contraction took a toll on the bottom line.
Quarterly revenues totaled $262.9 million, down 12.6% from the
prior-year quarter due to weak revenue per student and a decline
in total enrollments. Total revenue was marginally above the
Zacks Consensus Estimate of $262 million.
ITT Educational reported total enrollment of 57,542 students in
the fourth quarter of 2013, down 5.8% year over year. However,
new enrollments witnessed an increase of 4.5% to 13,995 students,
driven by increased scholarships offered by the company.
New enrollments increased for three quarters in a row driven by
an increase in new enrollments in drafting and design (up 7.8%),
electronics engineering (up 11.3%) and network administration (up
3.1%). New enrollment was also driven by growth in nursing
programs and the bachelor program in project management.
The company's revenue per student decreased 5.9% from the
prior-year quarter to $4,310.
During the quarter, student persistence rates declined 120 basis
points (bps) to 71.4% due to an 8.6% dip in the number of
continuing students. Student persistence rate is calculated by
dividing the number of continuing students in any academic term
by total student enrollment in the immediately preceding academic
Operating loss of $20.7 million was higher than the year ago loss
of $16.0 million due to a weak top line and higher bad debt
expenses. Operating margin dipped 260 bps to 7.9%.
Cost of educational services in the fourth quarter of 2013 came
in at $121.1 million, down 6.4% year over year, owing to a
decline in compensation costs and course supplies expenses due to
reduced student enrollment. However, as a percentage of revenues,
cost of educational services increased 310 bps to 46.1% owing to
a decline in revenues.
Full Year 2013
ITT Educational's earnings of $2.52 per share in full year 2013
lagged the Zacks Consensus Estimate of $4.21 by 40.0% and the
year ago level by 56.9%, primarily due to lower margins and a
double-digit decline in revenues.
Revenues for fiscal 2013 totaled $1.07 billion, down 16.9% from
the prior year due to weak revenue per student and a decline in
ITT Educational currently carries a Zacks Rank #3 (Hold).
Other education companies that warrant investor attention include
Apollo Education Group, Inc.
New Oriental Education & Technology Group
TAL Education Group
). All the three companies carry a Zacks Rank #2 (Buy).
APOLLO GROUP (APOL): Free Stock Analysis
NEW ORIENTAL ED (EDU): Free Stock Analysis
ITT EDUCATIONAL (ESI): Free Stock Analysis
TAL EDUCATN-ADR (XRS): Free Stock Analysis
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