College graduates, Domestic, For-Profit, Investors, Required, University & College - Written by on Friday, August 12, 2011 9:07 - 0 Comments

DeVry Inc. Beats Q4 EPS, but Stock Slumps: Here’s Why

flickr: control-f5

by Elbert Chu

 

Numbers

Last night, DeVry Inc. (NYSE:DV) reported Q4 EPS $1.08 on $546.8M revenue versus consensus $1.03 and $545.7M revenue. Medical training provided healthy profits in Q4, and you’ll recall that DeVry just purchased American University of the Caribbean, looking to add to their portfolio. At DeVry, it That’s the good news.

The bad news is that along with many of its compatriots in the education services sector, overall new enrollments are extremely weak. To be fair, DeVry’s -26%, is inline with peers.

Stock Action

Expect some weakness in the short run as investors absorb the lower than expected enrollment numbers. The entire sector remains under pressure while adjusting to economic weakness,  new regulations, insiders dishing dirt, more lawsuits, and continued scrutiny.

Long Term

Taking the negative sentiment in stride, UBS analyst Ariel Sokol says DeVry deserves a second look:

“We point out that over the past three weeks the stock has fallen by 27%, more than double the price decline of the S&P 500.  We think that DeVry’s stock declined more than the overall market and of note postsecondary bellwether  Apollo Group (17%) because investors were concerned about a possible earnings/starts disappointment.  Given that the catalyst has passed, we think the stock likely trades higher over the coming weeks as investors opportunistically scoop up what remains a high cash flow generating company (10% free cash flow yield).”

 

 



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