Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Don’t Get Schooled By DeVry Inc. (DV)

Page 1 of 2

DeVry Inc. (NYSE:DV) was up over 16% earlier this month on better than expected quarterly earnings. The for-profit education company has seen its stock soar over 55% the last six months. Are there still opportunities for this education company to go higher? Maybe not, but I believe there is one company in the industry that could be a solid buy.

DeVry’s recent run up was a result of higher profits, thanks in part to lower costs. Its quarterly earnings were up to $50 million, or $0.78 per share, from $9 million, or $0.13 per share for the same quarter last year. This number beat analysts’ expectations handily, which were $0.56 per share. This positive news comes despite the company’s struggles with poor enrollment growth, which has previously played a key role in the EPS growth (sequentially) of 26%, 24%, 56%, and 41% in the prior four quarters.

DeVry Inc. (NYSE:DV)Although earnings did beat estimates, the details of the recent earnings announcement show that DeVry’s quarterly sales fell 3.6% and enrollment was down 5.4% year over year. What’s more is that full year 2013 (ending June) earnings are expected to come in 20% below 2012 EPS (check out DeVry’s company profile).

Like I said, I don’t think DeVry is the best play in the for-profit higher-education industry, and when looking at the company’s valuation this becomes even clearer:

Price to Earnings (next year earnings) Price to Sales
DeVry (NYSE:DV) 11.5 0.95
American Public Education (NASDAQ:APEI) 15.2 2.36
Apollo Group (NASDAQ:APOL) 7.9 0.56
Corinthian Colleges (NASDAQ:COCO) 7.7 0.13
Strayer Education (NASDAQ:STRA) 12.1 1.27

Apollo Group Inc (NASDAQ:APOL) is my pick as the best stock in the industry and a potential buy for investors. It is one of the cheapest stocks in the industry, on both a price to earnings and price to sales basis. Meanwhile, it has better expected growth than top competitors DeVry and Strayer Education Inc (NASDAQ:STRA) :

5-Yr. Expected EPS Growth (Wall Street estimates)
DeVry 8.90%
American Public Education 15.50%
Apollo Group 10.20%
Corinthian Colleges 17.70%
Strayer Education 9.50%

Although Corinthian Colleges Inc  offers investors solid growth opportunities at an attractive valuation, the company is fundamentally different from online educators, where it operates campuses across the country. As a result, Corinthian has returns (ROI and ROE) that is subpar to some of the major operators. Recent quarterly results for Corinthian showed total new students enrollment fell by 4% year over year.

Digging even deeper, DeVry has been struggling with respect to return metrics:

Return on Investment Return on Equity
DeVry 10.80% 11.40%
American Public Education 27.30% 20.00%
Apollo Group 29.90% 38.60%
Corinthian Colleges 4.70% 5.60%
Strayer Education 47.10% 131%

American Public Education, Inc. (NASDAQ:APEI) also operates in the industry as one of the smaller online educators, with a sub-$1 billion market cap. The company reported recent third quarter 2012 earnings of $0.60 per share, beating consensus estimates of $0.50. Total revenue was also up 18% year over year. Although American Public Education has performed well, its valuation is now at the top of the industry.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!