NEW YORK (TheStreet) -- Corinthian Colleges (COCO) stock is soaring Tuesday after the post-secondary educator announced it had reached an agreement with its lenders in its syndicated credit facility to amend terms and to waive an event of default.
The event of default had occurred as a result of a deferred tax asset valuation allowance in its March-ending quarter.
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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 some concerns, 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 deteriorating net income, 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:
- 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 7703.7% when compared to the same quarter one year ago, falling from -$1.02 million to -$79.60 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Consumer Services industry and the overall market, CORINTHIAN COLLEGES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$19.40 million or 172.63% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 56.70%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1780.00% 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 has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CORINTHIAN COLLEGES INC increased its bottom line by earning $0.25 versus $0.21 in the prior year. For the next year, the market is expecting a contraction of 68.0% in earnings ($0.08 versus $0.25).
- You can view the full analysis from the report here: COCO Ratings Report