ITT Educational Services Earnings Preview

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ITT Educational Services (NYS: ESI) will try to beat its earnings estimates for the fifth consecutive quarter. The company will unveil its latest earnings on Thursday, Oct. 20. ITT Educational Services provides postsecondary degree programs in the United States. It offers diploma, associate, bachelor, and master degree programs.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on ITT Educational Services with nine of 15 analysts rating it hold. Analysts like ITT Educational Services better than competitor Career Education overall. Three out of 13 analysts rate Career Education a buy compared to four of 15 for ITT Educational Services. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $360.9 million in revenue this quarter. That would represent a decline of 9.9% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $2.28 per share. Estimates range from $2.10 to $2.39.

What our community says:
CAPS All-Stars are solidly backing the stock with 83.9% giving it an "outperform" rating. The community at large agrees with the All-Stars with 83.6% awarding it a rating of "outperform." Fools are keen on ITT Educational Services and haven't been shy with their opinions lately, logging 186 posts in the past 30 days. ITT Educational Services' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
ITT Educational Services' profit has risen year over year by an average of 2.7% over the past five quarters. Revenue has fallen in the past two quarters. The company's gross margin shrank by 3.4 percentage points in the last quarter. Revenue fell 3.5% while cost of sales rose 6.4% to $142.3 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

63.3%

64.0%

67.0%

66.4%

Operating Margin

33.5%

36.7%

39.6%

37.8%

Net Margin

20.4%

22.3%

23.8%

23.3%

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At the time this article was published

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