Career Education Shares Got Crushed: What You Need to Know
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 for-profit college operator Career Education (NAS: CECO) plunged a staggering 40% on Wednesday after the resignation of its CEO, Gary McCullough.
So what: Student sign-up rates for the entire sector have declined amid stricter government regulation, but McCullough's resignation suggests that Career Education is in a particularly troublesome spot. Of course, it doesn't help that the company also reported yet another disappointing quarter -- EPS fell to $0.14 from $0.33 in the year-ago period -- as enrollment continued to shrink.
Now what: Chairman Steven Lesnik will replace Gary McCullough on an interim basis until the company finds a permanent CEO. "Career Education is moving toward a new phase and the board views it as the appropriate time to start the process of putting in place fresh leadership at the CEO level," Lesnik said. But while Career Education might be a tempting turnaround play, Bridgepoint Education (NYS: BPI) and Corinthian Colleges (NAS: COCO) -- both of which expect enrollment growth in 2012 -- seem like safer bets.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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