The education industry had a pretty good day on Monday. However, we’re only interested in one company for this article, and that’s because it is the only name from the schools industry to make the Zacks #1 Rank List: Career Education Corporation (CECO).
CECO gained practically 6% today, which makes it one of the Top Performers. Volume on Monday surpassed 3.7 million shares, which more than doubled the daily average of over 1.7 million.
Education companies haven’t exactly been a boom industry of late. There’s a good deal of uncertainty as the government mulls over possible regulatory moves. That being said, though, such concerns have not kept Career Education Corp. from consistently beating quarterly earnings expectations. Nor has it impeded the company’s status as a Zacks #1 Rank (‘strong buy’) stock.
CECO will report its second-quarter results in early August. If the company beats again, it will have done so for a fifth consecutive quarter. Analysts appear to be waiting for that report, since there has been no movement in earnings estimates over the past 30 days. But the guidance for this year and next remain above levels from 2 months ago.
Career Education Corporation is a provider of private, for-profit post-secondary education with campuses throughout the United States and Canada, the United Kingdom and the United Arab Emirates. Their schools enjoy long operating histories and offer a variety of master’s degrees, bachelor’s degrees, associate degrees, and diploma programs in career-oriented disciplines.
Earnings Estimates for Career Education Corporation
For the company’s second quarter, the Zacks Consensus Estimate is currently 62 cents per share. It’s been at that level for the past two months, but is up 8.8% from 57 cents three months earlier. In the year-ago second quarter, the company earned 30 cents.
As for the 2010 outlook, the Zacks Consensus Estimate of $2.81 per share is up 1.4% from two months ago and 6% from three months ago. Out of 14 total estimates, there have been no changes, either upward or downward, in the past 30 days.
It’s the same story for next year. The Zacks Consensus Estimate for 2011 is $3.47 per share, unchanged in 30 days but up 1.5% in two months and 10.5% in three months. Furthermore, this guidance currently suggests year-over-year profit growth of more than 23%.
First-Quarter Report
As you probably already know, the schools industry is one of the unique spaces that actually prospers during difficult economic times. The idea being that people who are out of work will use their unwelcomed free time to go back to school and learn a new skill to be more competitive in a difficult job market. Well, while the economy appears to be in a slow recovery, the jobs market, unfortunately, is not.
In its first-quarter report from early May, Career Education Corporation reported earnings per share of 67 cents, which easily improved upon the year-earlier result while inching past the Zacks Consensus Estimate by a little more than 3%.
This marked the company’s fourth straight quarter with a positive earnings surprise. (However, it is important to note that this was the first time in those four quarters that the company failed to surprise in at least the double digits.) CECO has actually beaten in five out of the last six quarters and matched once. It last missed in the third quarter of 2008.
Total revenue from continuing operations jumped 22.4% year over year to $529.7 million from $432.9 million. The total student population was up 23% while total new student starts were up 32%.
The company also updated its share repurchase activity during the quarter, stating that it repurchased about 3.4 million shares of its common stock for $89.7 million at an average price of $26.71 per share.
