Please ensure Javascript is enabled for purposes of website accessibility

Why ITT Education Shares Popped

By Jeremy Bowman - Updated Nov 17, 2016 at 4:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is this meaningful? Or just another movement?

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: Shares of ITT Educational Services (ITT -4.16%) were flying higher today, gaining as much 34% after smashing analyst estimates in its quarterly report.

So what: New student enrollment was still down 3.6% at ITT, but the low bar made it easy for the for-profit educator to beat expectations. EPS of $1.33 topped estimates of $1.21, and revenue shrunk 15.8%, to $287.7 million, but also beat the analyst consensus at $277.7 million. The drop in new student enrollment was actually good news, as it was much smaller than the 14.2% total decline in student enrollment. The discrepancy could be viewed as evidence that ITT and its education peers are hitting a bottom with new student enrollment declines.

Now what: From a financial perspective, ITT looks like one of the best bets in this sector, with a 2013 P/E of less than six. Double-digit drops in revenue may be scary, and the stock is still down 70% from its 52-week high, indicating that it's still a long way away from the stable company it was once believed to be. Still, today's beat indicates that analysts may be exaggerating ITT's decline. If it can hold the line on new students, shares should begin to recover.

Want more on ITT? Add the company to your Watchlist by clicking right here.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ITT Inc. Stock Quote
ITT Inc.
$70.06 (-4.16%) $-3.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.