Lincoln Educational Services
P/E Ratio: 2.7X
Forward dividend yield: 13.3%
Shares of Lincoln Educational are down nearly 50% so far in 2011, scraping a 52-week low of $7.29 on Tuesday, as the for-profit education sector has been pressured by regulatory concerns and declining enrollments amid the slowdown in growth in the economy.
The company is slated to report its fiscal third-quarter results on Oct. 31, and the average estimate of analysts polled by Thomson Reuters is for a profit of 10 cents a share on revenue of $125.7 million in the September-ended quarter. Even an in-line report would mark a fourth consecutive quarter of declining revenue and Wall Street is bearish on the company with 6 of the 9 analysts covering the stock at hold.Wunderlich Securities initiated coverage of Lincoln Educational at hold with a 12-month price target of $11 on Sept. 1, and the firm is skeptical that company executives have a handle on the health of the business. "Multiple regulatory and economic pressures have forced enrollment dramatically lower, with Q2 starts declining 48%," Wunderlich said. "Management has called Q2 as the bottom and suggested the rate of decline will begin to improve in Q3, with positive growth some time in 2012. But management was surprised in Q2, and is burdened with fixed costs well above what is currently required. We would prefer to see evidence of improved visibility before endorsing the turn."