Test preparation company Princeton Review
The rest of the year doesn't look much more promising for the company. In the best-case scenario, Princeton expects to earn between nothing and $0.02 a share in Q4 -- meaning it will end the year in the red no matter what. In the worst case, the company may be forced to take a noncash charge that will just increase the size of its full-year loss. Either way, the chances that the company will meet consensus estimates for either next quarter or full-year 2004 seem small.
In short, Princeton is serving its owners pretty poorly in its mission to make them money. But to be honest, that's only second on my list of two reasons why I would never invest in this company. No. 1 by a long shot is that Princeton, like rival Kaplan Inc. (a unit of The Washington Post
Not to put too fine a point on it, Princeton teaches kids how to game the system, boosting their test scores so they can get into "name" colleges when their actual academic skills are too weak to do the trick. Thus it treats the symptom rather than the disease. Even worse, by selling the promise of better test scores (for a price), Princeton tends to frighten poor and middle-class families into -- most un-Foolishly -- straining their finances just to keep up with their wealthier classmates.
Personally, I put Princeton in the same class as companies such as Weight Watchers International
Prefer to put your money to work in companies whose services increase knowledge rather than test scores? Read all about the for-profit educators in:
- With Education Comes Wealth
- Grading ITT
- Cross-Examining Corinthian
- DeVry's Demise
- It's "Show Me" Time at Apollo
Fool contributor Rich Smith has no interest, short or long, in any of the companies mentioned in this article.