Career Education Earnings Preview

Career Education (Nasdaq: CECO  ) didn't hit the Street's expectations last quarter, but investors hope that it will rebound this quarter. The company will unveil its latest earnings on Monday, Feb.27. Career Education is a global education company that provides on-ground private for-profit postsecondary education in the United States and also has a presence in online education.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Career Education, with eight out of 11 analysts rating it a hold. Analysts don't like Career Education as much as competitor Grand Canyon Education overall. Seven out of seven analysts rate Grand Canyon Education a buy compared to zero out of 11 for Career Education. While analysts still rate the stock a moderate sell, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $436.5 million in revenue this quarter. That would represent a decline of 19.6% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.27 per share. Estimates range from $0.20 to $0.33.

What our community says:
CAPS All-Stars are in strong support of the stock, with 89.7% assigning it an outperform rating. The greater community concurs with the All-Stars, as 87% give it a rating of outperform. Fools are bullish on Career Education, though the message boards have been quiet lately, with only two posts in the past 30 days. Despite the majority sentiment in favor of Career Education, the stock has a middling CAPS rating of three out of five stars.

Management:
Career Education's income has fallen year over year by an average of 25.4% over the past five quarters. Revenue has fallen in the past two quarters. The company's gross margin shrank by 5.7 percentage points in the last quarter. Revenue fell 17.7% while cost of sales fell 2.2% to $155.6 million from a year earlier.

Now let's get some insight into how efficient management is at running the business. Margins illustrate how efficiently a company captures portions of sales dollars. Career Education's gross margins have been decreasing year over year for the last four quarters. Gross margins reflect the total sales revenue retained after costs. Here are Career Education's reported margins for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

63.9%

67.5%

68.9%

70.2%

Operating Margin

3.7%

16.6%

20.8%

4.5%

Net Margin

2.5%

11.1%

13.4%

2.2%

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Earnings estimates provided by Zacks.

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