Why DeVry Shares Dropped

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 DeVry (NYSE: DV  ) were tumbling today, falling as much as 22% after the for-profit educator released disappointing enrollment numbers in its quarterly earnings report.

So what: Profits dropped 15% at DeVry last quarter as new student enrollment at its namesake and biggest school fell 21%, while companywide enrollment declined 7%. Adjusted earnings of $0.90 a share beat analyst estimates by $0.09 but were down from $1 a year ago, and revenue missed by $10 million, falling 6% to $508 million. Still, it's the trend that counts here, especially with new students, who are seen as the lifeblood of the industry. With a 21% drop at its core school, investors have good reason to fear worse news ahead.

Now what: Adding insult to industry, some investment firms issued some negative responses following the report, as Deutsche Bank dropped DeVry from a buy to a hold because of the loss in enrollment, and Barrington Research said a "rebound in enrollment remains elusive," but it maintained its "market perform" rating. Education has been of the worst-performing sectors of the past two years as increased government scrutiny has led to lower enrollments and scrambling among schools to prove the worth of their offering. I'd stay away until everything is moving in the right direction.

Don't miss the next update on DeVry. Add the company to your Watchlist by clicking right here.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2384836, ~/Articles/ArticleHandler.aspx, 4/20/2014 12:39:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement