Why DeVry's Shares Dropped

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 educator DeVry (NYS: DV) were sent to the principal's office today after plunging as much as 30% in intraday trading.

So what: In theory, a pre-announcement on earnings could involve a company telling its investors that things are going even better than expected. In practice though, press releases like DeVry's fiscal-fourth-quarter "preview" usually end up bearing bad news.

In DeVry's case, the education company said that it expects to report fourth-quarter revenue ranging from $500 million to $510 million and earnings per share of $0.43 to $0.46. Analysts had been expecting EPS of $0.79 on revenue of $519 million. In addition, the company said it plans to take an $18 million charge against Advanced Academics, a $4 million charge for restructuring, and it will lay off around 570 employees.

Now what: In a sector that's been badly pummeled for years now, the woes for DeVry seem a sad continuation of the trend. In fact, investors are running with the news and selling off related stocks -- Corinthian Colleges (NAS: COCO) is down around 7% as of this writing and Apollo Group (NAS: APOL) dropped more than 4%. Career Education (NAS: CECO) also slipped 8% today.

What may be more troubling for the industry group is that DeVry was seen as one of the stronger players in the sector. That its footing seems to also be evaporating is not good news for weaker players.

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Editor's note: An earlier version of this article included incorrect information on the date of the departure of Career Education's CEO.

The article Why DeVry's Shares Dropped originally appeared on Fool.com.

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