ITT Educational Services Outruns Estimates Again

Seth Jayson, The Motley Fool
Updated

ITT Educational Services (NYS: ESI) reported earnings on Jan. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), ITT Educational Services beat expectations on revenue and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped, and GAAP earnings per share dropped significantly.

Margins shrank across the board.

Revenue details
ITT Educational Services logged revenue of $368.3 million. The 14 analysts polled by S&P Capital IQ hoped for revenue of $359.5 million. Sales were 10% lower than the prior-year quarter's $410.1 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $2.87. The 16 earnings estimates compiled by S&P Capital IQ forecast $2.31 per share on the same basis. GAAP EPS of $2.48 for Q4 were 8.6% lower than the prior-year quarter's $3.14 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 64.3%, 1,340 basis points worse than the prior-year quarter. Operating margin was 34.4%, 520 basis points worse than the prior-year quarter. Net margin was 20.7%, 310 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $336.2 million. On the bottom line, the average EPS estimate is $2.11.

Next year's average estimate for revenue is $1.35 billion. The average EPS estimate is $7.97.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 344 members out of 407 rating the stock outperform, and 63 members rating it underperform. Among 143 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 118 give ITT Educational Services a green thumbs-up, and 25 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ITT Educational Services is hold, with an average price target of $68.54.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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 Motley Fool has a disclosure policy.

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