Why Corinthian Colleges (COCO) Stock Is Down Today

NEW YORK (TheStreet) -- Corinthian Colleges (COCO) was falling -6.7% to $1.11 Tuesday after missing analysts' estimates for earnings and revenue in the fiscal third quarter.

For the fiscal third quarter Corinthian Colleges reported earnings of 3 cents a share, missing the Capital IQ Consensus Estimate of 5 cents a share by 2 cents. Revenue grew 11.6% from the year-ago quarter to $349.8 million. Analysts expected revenue of $355.13 million for the quarter.

Looking forward to the fiscal fourth quarter the company expects EPS of 11 cents to 13 cents a share, while analysts expect earnings of 5 cents a share. Corinthian Colleges expects revenue of $340 million to $350 million in the quarter, above analysts' estimates of $336.07 million.

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TheStreet Ratings team rates CORINTHIAN COLLEGES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate CORINTHIAN COLLEGES INC (COCO) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Diversified Consumer Services industry and the overall market on the basis of return on equity, CORINTHIAN COLLEGES INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has significantly decreased to $32.93 million or 59.69% when compared to the same quarter last year. Despite a decrease in cash flow of 59.69%, CORINTHIAN COLLEGES INC is still significantly exceeding the industry average of -127.76%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 50.00% 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.
  • CORINTHIAN COLLEGES INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, CORINTHIAN COLLEGES INC increased its bottom line by earning $0.22 versus $0.21 in the prior year. For the next year, the market is expecting a contraction of 70.5% in earnings ($0.07 versus $0.22).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Diversified Consumer Services industry average, but is greater than that of the S&P 500. The net income increased by 382.4% when compared to the same quarter one year prior, rising from -$0.07 million to $0.19 million.
  • You can view the full analysis from the report here: COCO Ratings Report

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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.

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