Markets

ITT Educational Beats on Q4 Earnings, Shares Rise 14%

Share price of ITT Educational Services, Inc.ESI soared 14.42% during afterhours trading on Mar 14, as the education company reported earnings per share of 44 cents in the fourth quarter 2015, crushing the Zacks Consensus Estimate of 18 cents by 144.4%.

However, earnings per share decreased 29% from 62 cents in the prior-year quarter due to declining revenues.

The company reported revenues of $202.4 million, which lagged the Zacks Consensus Estimate of $205 million by 1.3%. Revenues also fell 16.8% year over year due to a decline in enrollment levels.

Total enrollment of 44,922 students was down 16.3% year over year owing to declines in continuing students, new student enrollment and persistence rate.

New enrollment of 10,478 students declined 17.1% year over year, within the company's expectation of 15% to 20% decline. New enrollment was hurt by closure of enrollment process across 10 campus locations and lower conversion rate. Many prospective students, who had enquired about the programs, did not start classes. Management believes that the lower conversion rate was due to students' concerns about the cost of post-secondary education and its value amid economic and labor market disruptions.

Continuing students declined 16% year over year. Persistence rate declined 40 basis points (bps) to 44.9% owing to a decline in student retention.

Operating margin decreased 70 bps to 13.5% owing to soft revenue. As a percentage of revenue, bad debt expense moderated 320 bps to 3.7% during the year owing to the company's cost control efforts.

Fiscal 2015

ITT Educational Services' earnings per share of 97 cents in fiscal 2015 surpassed the Zacks Consensus Estimate of 78 cents by 24.4%. However, earnings per share decreased 1% from 98 cents in the prior year owing to lower revenues.

The company reported revenues of $849.8 million, which lagged the Zacks Consensus Estimate of $851 million by 0.1%. Revenues also fell 11.6% year over year due to a decline in enrollment levels.

Outlook

Earnings before interest, taxes, appreciation and amortization (EBITDA) for fiscal 2016 are expected between $50 million and $70 million.

For fiscal 2016, the company expects new enrollment to decline in the range 12% to 15%.

ITT Educational Services has a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the education industry include American Public Education, Inc. APEI , Grand Canyon Education, Inc. LOPE and Capella Education Co. CPLA . While American Public Education sports a Zacks Rank #1 (Strong Buy), Grand Canyon Education and Capella Education hold a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMER PUB EDUCAT (APEI): Free Stock Analysis Report

CAPELLA EDUCATN (CPLA): Free Stock Analysis Report

ITT EDUCATIONAL (ESI): Free Stock Analysis Report

GRAND CANYON ED (LOPE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

LOPE APEI

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More