Lincoln Educational Services Corp. (LINC) recently surged higher to hit a new 52-week high on the company’s better than expected Q4 results from early March.
Company Description
Lincoln Educational Services Corp. provides career oriented, post-secondary education services in the United States. The company has 30,000 plus enrollees, 43 campuses in 17 states, was founded in 1946 and has a market cap of $735 million.
Private education providers have been scooping up big gains in the weak economy as high-school grads and various professionals look to beef up their resumes or enter a new field. This dynamic lifted Lincoln to record Q4 results, reported on March 3.
Fourth-Quarter Results
Revenue for the quarter was up 47% from last year to a record $157.5 million. Earnings came in at 82 cents per share, 17% ahead of the Zacks Consensus Estimate. Lincoln has averaged a 134% earnings surprise over the last year.
Lincoln’s results were driven by strong enrollment growth, with student starts up 32% from last year and same-school starts up 25%. The company was able to compliment its top-line growth with expense management, with its selling, general and administrative costs down 3.5% from last year to 40% of revenue.
Bad Loans
Lincoln is seeing an up tick in its bad loans, which climbed to 7% of revenue from 5.4% last year. In response, the company has increased its loss reserves to 17% of receivables from 10%.
Estimates Up
But in spite of some spotty loans, the company is posting big numbers, causing the analysts to raise guidance. The current-year estimate is up 35 cents in the last 3 months to $2.39, while the next-year estimate is up 34 cents to $2.74, a solid 15% growth projection.
Shares of LINC still offer value in spite of the recent gains, trading with a forward P/E multiple of 12X.
The Chart
Shares of LINC had been trending higher for most of the last year before recently jumping higher to a new 52-week high on the good quarter. If shares weaken or pull back, look for support at $24.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service. Zacks Investment Research
