ITT Educational Q4 Loss Widens Y/Y - Analyst Blog


ITT Educational Services Inc .'s ( ESI ) 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 term.

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 total enrollments.

ITT Educational currently carries a Zacks Rank #3 (Hold).

Other education companies that warrant investor attention include Apollo Education Group, Inc. ( APOL ), New Oriental Education & Technology Group Inc. ( EDU ) and TAL Education Group ( XRS ). All the three companies carry a Zacks Rank #2 (Buy).   

APOLLO GROUP (APOL): Free Stock Analysis Report

NEW ORIENTAL ED (EDU): Free Stock Analysis Report

ITT EDUCATIONAL (ESI): Free Stock Analysis Report

TAL EDUCATN-ADR (XRS): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: APOL , EDU , ESI , XRS

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