Summer's almost gone, and with it goes Corinthian College's (NASDAQ:COCO) 2007 fiscal year. Now's the time for stocking up on school supplies -- and preparing to grade Corinthian's final exam. Q4 and full-year 2007 earnings for the for-profit educator are due out Tuesday morning.

What analysts say:

  • Buy, sell, or waffle? Fourteen analysts still follow Corinthian, down three from the beginning of the year. Six rate Corinthian a buy, seven more a hold, and one says to sell.
  • Revenues. On average, they expect to see revenues rise 3% to $243.7 million.
  • Earnings. Profits are predicted to plummet 69% to $0.04 per share.

What management says:
 Much like peer for-profit educator Career Education (NASDAQ:CECO) (and regrettably, unlike Universal Technical Education (NYSE:UTI)), Corinthian has decided it's time to cut back on its course load this semester. On July 30, Corinthian announced that it will attempt to divest 13 of its schools, including a dozen schools up in Canada, exclusive of Ontario, and also the WyoTech Boston campus. Corinthian hopes to complete the sales by the end of fiscal 2008. However, it has not yet found a buyer, and rival Career Education has had trouble unloading its own crop of campuses.

Numbers-wise, we're told to expect a $0.07 charge to earnings this quarter as the to-be-sold assets are written down in value. Additionally, look out for "employee retention and severance costs" to be recorded at a future date. Unfortunately, management informs that these "cannot be reasonably estimated at this time."

What management does:
Toward both the top and bottom lines, we see Corinthian's rolling gross and net margins falling steadily over the last three quarters. Expect to see at least the net deteriorate even further as the charges to earnings described above come home to roost.

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

43.2%

42.7%

43.1%

42.8%

42.2%

41.8%

Operating

8.5%

6.9%

6.7%

5.7%

4.5%

4.5%

Net

4.3%

3.6%

4.3%

3.7%

2.8%

2.6%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Considering how much Corinthian told us in its voluminous update of Aug. 1, there's going to be little news in Tuesday's report. But that's OK -- the company told us plenty already. For example, the reason the Canadian schools are being sold is because they've failed to reach the "critical mass" of Corinthian's schools within Ontario in particular, where Corinthian dominates the for-profit education market with a 30%-plus share.

In contrast, the schools being sold lacked such "critical mass" -- and the economies of scale that come with it. Contributing a combined $38 million in fiscal 2007 revenues (4% of firmwide sales), but subtracting $0.03 per share from operating profits, and attracting new students at a slower rate than the rest of Corinthian's properties, they have been a drag on Corinthian's profitability and probably deserve to be cut from the team.

Extra credit reading material on Corinthian is available in the library:

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Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.