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For-Profit Education Stocks Surged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of for-profit educators moved to the head of the class today, with Corinthian Colleges (Nasdaq: COCO  ) leading the way with a gain of as much as 44%.

So what: For-profit schools will take good news wherever they can get it these days, and today it came in the form of Corinthian's fiscal second-quarter earnings report. Revenue for the quarter decreased 14% from the same quarter of the prior year, while the total student population declined 10%. Excluding impairment charges, diluted earnings per share were $0.04 versus $0.23 a year ago.

Revenue edged out analysts' expectations, while the per-share profit tally was significantly better than the $0.01 that Wall Street was looking for.

Now what: Fellow for-profit educators took the cue from Corinthian and were rallying as well. Career Education (Nasdaq: CECO  ) was up as much as 11% today, while Strayer (Nasdaq: STRA  ) , DeVry (NYSE: DV  ) , and ITT Educational Services (NYSE: ESI  ) were also tacking on gains. The sector as a whole has been under a cloud as the government has cracked down on certain practices, including the way the schools recruit students. Today, investors may be seeing Corinthian's second quarter -- and maybe moreso its sanguine view of the upcoming quarter -- as a sign that the industry is starting to rebound and rebuild and that a resumption of growth is in the lesson plan for the year ahead.

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Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.

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10/20/2016 4:00 PM
CECO $7.10 Up +0.05 +0.71%
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