Career Education Corporation (CECO) In A Perilous Reversal

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Career Education Corporation ( CECO) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Career Education Corporation as such a stock due to the following factors:

  • CECO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.6 million.
  • CECO has traded 397,370 shares today.
  • CECO is down 5% today.
  • CECO was up 57.4% yesterday.

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More details on CECO:

Career Education Corporation operates colleges, schools, and universities that provide educational services in career-oriented disciplines worldwide. Currently there are no analysts that rate Career Education Corporation a buy, 3 analysts rate it a sell, and 5 rate it a hold.

The average volume for Career Education Corporation has been 692,000 shares per day over the past 30 days. Career has a market cap of $178.4 million and is part of the services sector and diversified services industry. The stock has a beta of 2.15 and a short float of 7.7% with 1.67 days to cover. Shares are down 24.3% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Career Education Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$52.78 million or 6710.06% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • CECO has underperformed the S&P 500 Index, declining 14.76% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Consumer Services industry and the overall market, CAREER EDUCATION CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CAREER EDUCATION CORP is rather high; currently it is at 58.84%. Regardless of CECO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CECO's net profit margin of -10.64% significantly underperformed when compared to the industry average.
  • CECO, with its decline in revenue, slightly underperformed the industry average of 11.3%. Since the same quarter one year prior, revenues fell by 19.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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