DeVry Education Group Inc.
) is set to report the second-quarter fiscal 2014 results on Feb
4, after the market closes. Last quarter, it posted a negative
earnings surprise of 4.35%. Let's see how things are shaping up
for this announcement.
Factors to Consider this Quarter
The company has been struggling with its top line as the
relatively strong growth in the healthcare and international
businesses (growth institutions) is being offset by revenue
declines at the struggling flagship DeVry University which
accounts for half of the company's revenues. DeVry University has
been witnessing persistent enrollment declines as a result of
overall economic downturn and lack of student confidence which
has reduced demand. Many other schools like
Apollo Education Group, Inc.
) and ITT Educational Services have also been hurt by the weak
Enrollment trends at DeVry University are not expected to
improve much in fiscal 2014. In the second quarter, revenues are
expected to grow at all institutions, except DeVry
Regarding costs, total operating costs are also expected to
increase slightly year over year in the second quarter. Costs at
growth institutions (like Chamberlain, Ross, Becker and DeVry
Brasil) are expected to increase sequentially. However, at
transition institutions (like DeVry University and Carrington),
costs are expected to decline both year over year and
Our proven model does not conclusively show that DeVry is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
Negative Zacks ESP:
The Earnings ESP is -1.33%. That is because the Most Accurate
estimate stands at 74 cents while the Zacks Consensus Estimate is
higher at 75 cents. That is a difference of -1.33%.
Zacks Rank #4 (Sell):
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies that you may consider, as our
model shows that they have the right combination of elements to
post an earnings beat this quarter:
), with Earnings ESP of +12.1% and a Zacks Rank #3 (Hold).
Universal Technical Institute, Inc.
), with Earnings ESP of +100.0% and a Zacks Rank #3.
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