Over the past few years, information technology training has looked a lot like a classic Rust Belt industry. Many have wondered whether the industry will die.
Yet the survivors -- among them Skillsoft
No wonder investors are skittish, and it shouldn't be a surprise that they'd rather diversify with more generalized for-profit education providers like Apollo Group
But some investors are nibbling on IT-training stocks. One company getting some notice is Learning Tree
Last week, Learning Tree announced its earnings. For the quarter ending Dec. 31, the company posted revenues of $39.8 million, down slightly from $39.9 million for the same quarter in 2003. Similarly, net income for the previous quarter was $2.1 million, down a little from $2.4 million in 2003.
On its face, the numbers were ho-hum-worthy. Yet the stock surged more than 12%, to $15.73.
Why? Learning Tree beat Street estimates -- which, given the state of the industry, were understandably depressed. Consensus estimates were for revenues of $38.9 million and earnings of $0.05 per share. Instead, the company posted earnings per share of $0.13.
In a nutshell, the company had the best news it could get: increased enrollments.
Does this mean the industry's long nightmare is over? True, the good results could be an anomaly. But the recent buzz has been that IT spending is picking up, and if so, training providers will benefit later in the cycle. Judging by the impact on Learning Tree's stock price, some investors are taking a bet on such a turnaround.
Fool contributor Tom Taulli does not own shares mentioned in this article.