Apollo Group Inc (APOL) and More: Are There Profits To Be Made With For-Profit Education Stocks?

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A Bridgepoint worth traversing

Bridgepoint Education Inc (NYSE:BPI) has only been public since 2009, but that doesn’t mean it has been spared the pain of others in the space. The company is now sitting basically where it was when it went public, down approximately 60% from the near $30 all-time high it reached in 2011.

Like Career Education, Bridgepoint has a pristine balance sheet, with no debt and just over $6 per share in net cash. That war chest equates to approximately 55% of its current $10.80 share price. The company’s earnings have also been choppy the past four quarters, but returns on equity have been stellar, exceeding 33%, while returns on assets have been fantastic, coming in over 21%.

Add in the fact that the company trades at an anemic 1 times enterprise value/EBITDA, and its fantastic insider ownership, with the well-respected Warburg Pincus owning well over 60% of the shares outstanding, and I think BPI will be a winner as well.

A degree of discernment

In conclusion, virtually all for-profit education stocks have been crushed and left for dead. That’s great for a value investor like myself, since it typically leads to some nice bargains. With their stellar balance sheets, extremely low expecations, and fantastic insider ownership — by owners that may very well take the rest of the company over at a nice premium — I’m especially intrigued by Career Education and Bridgepoint Education (NYSE:BPI).

The article Are There Profits To Be Made With For-Profit Education Stocks? originally appeared on Fool.com and is written by Brian Gorban.

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