Why Education Management 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 Education Management  (NASDAQOTH: EDMC  ) were getting held back today, falling as much as 14% and finishing down 5% after a downgrade from BMO Capital Markets.

So what: Coming two days after the for-profit educator's disappointing earnings report, BMO lowered its rating on the stock from market perform to underperform and dropped its price target to $7 from $10. Education Management shares fell 7% yesterday after its earnings report came out as revenues declined 4.8% on a 6.1% drop in new enrollment and an 8.5% slide in overall student count. Its loss per share improved from $0.11 to $0.08.

Now what: Though Education Management beat earnings estimates, it missed out on the industrywide trend that's sent education stocks up this earnings season as many topped expectations, seeing smaller sales declines than expected. Education Management's stock drop seems to have come from shares being bid up so high in the first place this year as it's essentially since the beginning of the year. Still, the stock is well below a late-2011 peak above $25. With sales and enrollments still declining and the stock's recent spike fading, now looks like a good time to sell. 

Where the real growth stocks are
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.


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.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2710370, ~/Articles/ArticleHandler.aspx, 12/19/2014 11:01:12 PM

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...

Today's Market

updated 45 minutes ago Sponsored by:
DOW 17,804.80 26.65 0.15%
S&P 500 2,070.65 9.42 0.46%
NASD 4,765.38 16.98 0.36%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/19/2014 3:59 PM
EDMC $0.24 Down -0.01 -4.00%
Education Mgmt CAPS Rating: *

Advertisement