ITT Educational Services, Inc. (ESI): Who’s A Buy Now?

Despite all the headwinds, ITT Educational Services, Inc. (NYSE:ESI) is making money. The stock has a 4.39 price-to-earnings ratio and an 8.32 forward P/E. The stock market puts more emphasis on the future rather than the present, so ITT’s forward P/E is a more important metric. Apollo trades at an 8.47 forward P/E, DeVry trades at an 11.39 forward P/E and Corinthian trades at an 7.88 forward P/E. Of course, it’s important to mention that analyst estimates are often revised as the year progresses. Full-year 2013 earnings estimates for ITT have grown 3.8% during the last 90 days alone.

The bottom line

ITT currently operates at a 22.81% margin. Its competitors’ margins are lower, with Apollo having a 15.93% operating margin, DeVry having an 11.91% operating margin and Corinthian operating at a minuscule 3.57% margin. A bigger operating margin provides more flexibility for the company, meaning that ITT Educational Services, Inc. (NYSE:ESI) can afford more pricing experiments such as its scholarship program to try to gain more customers.

I think that ITT Educational Services, Inc. (NYSE:ESI) is a good investment. The stock is currently cheap and the company is actively taking steps to increase new enrollments. As the job market slowly shows improvement, more people will likely be willing to seek additional education to acquire the skills necessary to land higher-paying jobs. This will help all educational companies, and given its advantages will help ITT in particular.

The article This Educational Stock Is a Cheap Buy originally appeared on Fool.com and is written by Vladimir Zernov.

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