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For-Profit Education Stocks: Winners & Losers of 2010

Career Education

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Career Education (CECO)

Year-to-Date Share Price Percentage Loss: -20.21%

Market Capitalization: $1.64 Billion

Career Education took advantage of the pressure on its stock price this year, increasing its share buyback program and establishing an $80 million 10b5-1 plan , adding to an existing $290 million authorization.

A purchase of the entire amount near its current stock price would add one-third to BMO Capital Markets analyst Jeffrey Silber's 2011 earnings-per-share estimates, he noted. Even so, Silber maintained a market perform rating on the stock.

On Nov. 2 Career Education grew third-quarter profits to 33 cents per share, up from 25 cents in the year-earlier period. New student enrollment rose 6% in the quarter.

Career Education said it was working to improve the quality of its student outcomes, but forecast lower student enrollment as it moves to alter some of its programs and recruiting practices, part of its effort to reduce student debt and boost graduation rates.

"In the fourth quarter, we will continue to face more challenging comparable data points from 2009 and the softening enrollment trends while also preparing for potential business changes," a Career Education executive said on its earnings conference call in early November.

The operator of colleges and universities under the American InterContinental University, Colorado Technical University, International Academy of Design & Technology and Le Cordon Bleu College of Culinary Arts brands said it will not be unable to meet its long-term 2011 targets, having forecast revenue growth of 8% to 10% between 2011 and 2014.

Wall Street's consensus call is for Career Education to book 2010 earnings of $2.62 per share on revenue of $2.14 billion. If results are in line it would represent a nearly doubling of year-over-year EPS, and 16.3% growth in year-over-year revenue.


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