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.

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.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...