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 ITT Educational Services ( ESI) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified ITT Educational Services as such a stock due to the following factors:

  • ESI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $43.0 million.
  • ESI has traded 1.6 million shares today.
  • ESI is down 3.8% today.
  • ESI was up 38% yesterday.

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More details on ESI:

ITT Educational Services, Inc. provides postsecondary degree programs in the United States. Currently there are 2 analysts that rate ITT Educational Services a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for ITT Educational Services has been 1.4 million shares per day over the past 30 days. ITT Educational Services has a market cap of $215.5 million and is part of the services sector and diversified services industry. The stock has a beta of 2.07 and a short float of 90.2% with 3.76 days to cover. Shares are down 62.2% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ITT Educational Services as a sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself, deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • Looking at the price performance of ESI's shares over the past 12 months, there is not much good news to report: the stock is down 82.60%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • 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 decreased by 21.9% when compared to the same quarter one year ago, dropping from -$9.47 million to -$11.55 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, ITT EDUCATIONAL SERVICES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $60.16 million or 30.52% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • ITT EDUCATIONAL SERVICES INC's earnings per share declined by 19.5% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ITT EDUCATIONAL SERVICES INC reported lower earnings of $0.03 versus $5.72 in the prior year. This year, the market expects an improvement in earnings ($2.91 versus $0.03).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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