ITT Educational Services Inc. Stock Downgraded (ESI)
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- ITT EDUCATIONAL SERVICES INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ITT EDUCATIONAL SERVICES INC reported lower earnings of $5.76 versus $11.11 in the prior year. For the next year, the market is expecting a contraction of 21.5% in earnings ($4.52 versus $5.76).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Consumer Services industry. The net income has significantly decreased by 112.5% when compared to the same quarter one year ago, falling from $76.05 million to -$9.47 million.
- The debt-to-equity ratio of 1.10 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, ESI's quick ratio is somewhat strong at 1.06, demonstrating the ability to handle short-term liquidity needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 74.90%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 114.28% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Net operating cash flow has declined marginally to $86.59 million or 9.81% when compared to the same quarter last year. Despite a decrease in cash flow of 9.81%, ITT EDUCATIONAL SERVICES INC is still significantly exceeding the industry average of -64.70%.
-- Written by a member of TheStreet Ratings Staff
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