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What Awaits DeVry Education (DV) this Earnings Season?

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We expect DeVry Education Group Inc.DV to beat expectations when it reports first-quarter fiscal 2016 results on Oct 22 after the market closes. Last quarter, it posted a negative surprise of 9.52%. Meanwhile, the company has beaten earnings estimates in two of the trailing four quarters and has an average positive earnings surprise of 10.30%. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that DeVry Education Group's is likely to beat earnings because it has the right combination of two key components.

Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +13.89%, as the Most Accurate Estimate of 41 cents is higher than the Zacks Consensus Estimate of 36 cents. This is meaningful and indicates a likely earnings surprise.

Zacks Rank: DeVry Education Group's has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. Meanwhile, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of DeVry Education Group's' Zacks Rank #3 and +13.89% ESP makes us confident of an earnings beat.

What's Driving the Better-Than-Expected Earnings?

DeVry's medical and health care schools have been doing well owing to growing demand for medical programs and campus expansions. The company expects its medical and international institutions to perform well in the September session.

This Illinois-based education company expects its DeVry Medical International segment to report year-over-year increases of 16-17% in new student enrollment and 1-2% in total enrollment in September.

Chamberlain College of Nursing is expected to report year-over-year growth of 23-25% in new student enrollment and 20-22% in total enrollment.

Carrington College expects new student enrollment to increase 3-4%, while total enrollment is expected to decline about 3-4%.

During fiscal 2015, DeVry Brasil acquired Faculdade Martha Falcão (FMF), Faculdade Ideal, and Damásio Educacional. DeVry Brasil's September enrollment figures will include the impact of these acquisitions and is expected to register a massive upside. The company expects new student enrollment at DeVry Brasil to escalate a whopping 180% to 190%. Total enrollment is expected to increase in the range of 70-75%.

However, higher growth investments in health care schools and declining enrollment levels at its flagship institution, DeVry University, due to weak demand have been eating into the company's revenue and profits in the past three quarters. DeVry expects these headwinds to affect first-quarter results as well.

First-quarter 2016 revenues are expected to decrease year over year due to an unfavorable translation of the Brazilian currency and weak revenues at DeVry University. Moreover, DeVry expects new undergraduate student enrollment to decline 24-26% and total enrollment to decline 20-22% for the Sep 2015 session at its flagship DeVry University. The number of graduate course takers is expected to reduce between 17-18%.

Stocks to Consider

Here are some other companies in the consumer discretionary sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Boyd Gaming Corporation BYD , Earnings ESP of +20.00% and a Zacks Rank #1 (Strong Buy).

Norwegian Cruise Line Holdings Ltd. NCLH , Earnings ESP of +1.48% and a Zacks Rank #1

Nexstar Broadcasting Group, Inc. NXST , Earnings ESP of +8.93% and a Zacks Rank #2.

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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

DEVRY EDUCATION (DV): Free Stock Analysis Report

BOYD GAMING CP (BYD): Free Stock Analysis Report

NORWEGIAN CRUIS (NCLH): Free Stock Analysis Report

NEXSTAR BRDCSTG (NXST): Free Stock Analysis Report

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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.

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