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: For-profit educator ITT Educational Services
So what: For-profit educators have had a rough time lately. They've been excoriated in the press and on PBS. The Department of Education is on the warpath, cracking down on the use of federal student loans to pay for tuition at for-profit schools. As purse strings tighten, industry leader Apollo Group
Now what: As I said, while not as bad as feared, the news still wasn't great. Revenues at the company flatlined, for example. Still, earnings did grow (to $2.91 per share), and at a current valuation of barely 6 times earnings, ITT shares will look awfully cheap if the company can manage to maintain any growth whatsoever. (And analysts are looking for at least 7% annual growth over the next five years.)
In short, the shares are certainly "cheap for a reason" -- but while bearing in mind the reasons, don't overlook the fact that they are cheap.
Is "cheap" a good enough reason to own ITT Educational? Add ITT to your Watchlist, and watch how the story develops.
Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.