For-profit graduate and undergraduate educator DeVry
Revenues were up 16% year on year; earnings, only 9.4%. Because stock dilution was minimal over the past year (less than 1%), per-share diluted earnings tracked the growth of the company's earnings as a whole.
So already, DeVry is painting a less-than-pretty picture: Revenue growth is not being translated into equivalent earnings growth. And if you pull back and look at the big picture of the first nine months of fiscal 2004 versus the first nine months of fiscal 2003, that picture is even uglier.
Again, revenues grew 16%. But over the longer time frame, per-share diluted earnings fell more than 14%. Which puts in doubt the only explanation the company gave for its recent mediocre performance: that the exam schedule for CPA candidates changed, precluding some would-be accountants from signing up for the company's Becker Professional Review course. DeVry said that it expects the students who did not sign up this quarter to sign up next quarter, because they will still be taking the review course for the exam -- just a little later.
I am sure that is true, as far as it goes. But it still does not explain why the company is pulling in more revenues, yet squeezing fewer profits out of those revenues -- especially over the two quarters preceding this one. The income statement answers that one: Over both the three- and nine-month periods we are looking at here, expenses increased 20% against revenue increases of only 16%. Contrast that performance with the improving profitability of, say, Apollo Group
Which is why it looks to me like DeVry's students aren't the only people getting schooled here.
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