CARMEL, Ind. (AP) â¿¿ ITT Educational Services saw net income plunge 42 percent during the second quarter, extending a pattern in the for-profit college sector where student enrollment has evaporated under stricter federal regulation that hold companies more accountable for graduation rates and job placement.
Stocks across the sector slumped earlier this week as the first earnings reports rolled out, revealing that enrollments, revenue and profits are in decline. They fell further Thursday.
Shares in ITT Educational Services Inc. fell 8 percent, or $4.10, to $46.33 in afternoon trading. They have lost half their value from a year ago and at one point Thursday, touched a 52-week low of $39.52.
The company said net income for the April-through-June period was $46 million, or $1.96 per share, down from $79 million, or $2.85 per share, in the second quarter of 2011.Revenue declined 15 percent to $329.8 million from $387.9 million. Analysts polled by FactSet were looking for earnings of $2.17 per share and revenue of $338 million. The company said new student enrollment in the second quarter decreased 9.5 percent to 15,698, down from 17,351 in the same period a year ago. Total student enrollment sank 15.7 percent to 66,397 as of June 30, down from 78,743 a year earlier. Citi analyst James Samford said in a note to investors that the enrollment drop was worse than expected. He also cited its operating margin decrease in an environment of declining revenue as a concern. ITT, based in Carmel, Ind., offers degrees in subjects such as computer programing and web development through its ITT Technical Institutes and Daniel Webster Colleges. The industry saw enrollment rise during the recession as unemployment rose and people sought new skills to improve their job prospects. Taking its toll on the industry are the regulatory changes and also criticism, much of it from congress, that the schools were leaving ill-prepared students with slim odds of finding a job and as such, paying off huge college loans.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV