Take out your red ink pens once more, Fools. Corinthian Colleges (NYSE:COCO) will be the next for-profit educator to hand in its midterm. The company reports on its fiscal Q2 2006 earnings bright and early tomorrow.

Wall Street Wisdom:

  • General consensus. Fourteen analysts follow the company, with 10 perched on the "hold" fence. Among the others, three say "buy" and one says "sell."
  • Revenues. Analysts believe revenues for the quarter stayed almost flat against last year -- up just 0.2% to $248.6 million.
  • Earnings. Sadly, the same can't be said for profits. Analysts believe the company earned only half as much this quarter ($0.11) as it did one year ago. Incidentally, that's exactly what happened last quarter, as well -- earnings fell by half, from $0.16 to $0.08 per share.

Margin watch:
The past couple of quarters have not been kind to Corinthian's margins (or its stock, either). Sales growth is slowing (see above revenue estimate), and efforts to jump-start it again through additional spending on marketing have had little effect to date -- aside from reducing operating margins.

Margins %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

47.3

46.2

45.7

45.3

44.4

43.7

Op.

16.7

14.8

13.7

13.0

11.7

10.3

Net

9.5

8.3

7.8

7.6

6.1

5.2
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Valuation metrics:
Primarily as a result of the firm's weak margins in recent quarters, its stock looks a bit pricey. Against 17.5% projected long-term annual earnings growth, Corinthian sports a P/E of 22 and a price-to- free cash flow ratio of 25.

Foolish lookout:
Management doesn't agree that its stock is overpriced. Three months ago, it sought and received approval from its board to repurchase up to $70 million worth of stock. We'll want to check on how that buyback is progressing tomorrow. Also interesting would be any news on the new investigation of a Corinthian school announced by the Florida Attorney General's office. Is this deja vu all over again?

Fool contributor Rich Smith does not own shares of Corinthian.