ITT Educational Services (NYSE: ESI) ended 2010 well. In its Q4 earnings released Thursday morning, the company reported revenue and earnings of $410.1 million and $3.14 per share, respectively. For the full year, the for-profit education company reported revenue of $1.6 billion and earnings of $11.17 per share. ITT met or exceeded average analyst expectations.

Despite the solid numbers reported by ITT and University of Phoenix parent, Apollo Group (Nasdaq: APOL) for 2010, the future looks cloudy for the industry. The for-profit education industry is under the microscope of government regulators for its student loan repayment rates, graduation rates, and marketing and recruitment tactics -- and the scrutiny is impacting the outlook for the future.

In its earnings release, ITT reports that it expects 2011 earnings per share to be in the range of $8.50 to $10.50 per share, a drop of 6% to 31% from its 2010 results. Yet despite the gloomy forecast, ITT's stock bounced as much as 11.6% higher during trading, suggesting that analysts and investors thought the news would be worse. In addition, ITT and other stocks in the for-profit education industry look cheap, though I'm not convinced they are as cheap as they might appear.

New student enrollments, a key indicator of future revenue, are falling. ITT reported that its new enrollments were down 9.4%, while in the same quarter last year, they grew 31.2%. This drop in new enrollments is not unique to ITT. Apollo and Strayer Education (Nasdaq: STRA) recently announced much larger year-over-year declines, reporting drops of 42% and 20%, respectively, making me wonder if larger drops are on the horizon for ITT.

I expect 2011 to be bumpy for ITT and other big names in the for-profit education sector and would take a wait-and-see approach with the stocks. To stay abreast of ITT and the other for-profit educators mentioned in this article, add them to your watchlist.

  • Add ITT to My Watchlist.
  • Add Apollo to My Watchlist.
  • Add Strayer to My Watchlist.

Fool contributor April Taylor does not own shares of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.