Charles De Vaulx Still Believes In DeVry Education Group Inc. (DV) Despite Worsening Trends In The U.S. For-Profit Education Industry

Just a little while ago, analysts at Deutsche Bank, one of the leading financial service providers in the world, downgraded their rating on DeVry Education Group to “Hold” from “Buy”, and reduced their price target to $34 from $40. Deutsche Bank declared that it lowered the rating based on the worsening trends in the U.S. for-profit education industry. And the decline is clearly in progress. As stated by the National Student Clearinghouse Research Center, for-profit student enrollment decreased by 4.9% compared to last spring. As a result, the decrease in enrollment puts downward pressure on the revenue generated by DeVry Education Group. It is believed that the for-profit sector is currently in the bust period of its systematic boom-and-bust cycle. Whereas, one of the main competitors of for-profits are the non-profits in the online market, which have been gaining ground over the last few years. Therefore, it is really hard to see how DeVry Education Group can achieve a much-needed turnaround.

DeVry Education Group is set to post its fourth-quarter and year-end financial results on August 18, so it would be worthwhile to investigate whether the transformation strategy that has been undertaken by DeVry University lately is making progress. The Illinois-based corporation previously announced its plans to improve the competitive positioning of DeVry University and return the institution to growth. It’s quite clear that the transformation process is not likely to be reflected in the financial performance of the company for the fiscal fourth quarter, but the updates that are anticipated to be provided by the officials at DeVry Education Group will give an idea of how successful the process has been so far. In the meantime, DeVry Education Group posted total revenue of $1.44 billion for the fiscal third quarter of 2015 that ended on March 31, which yielded a decrease of 0.1% year-over-year. At the same time, the diluted earnings per share came in at $1.68, compared to $1.49 reported last year.

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