Why Corinthian Colleges Shares Went to Detention

Why Corinthian Colleges Shares Went to Detention

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 Corinthian Colleges , a for-profit education company operating under the Everest, WyoTech, and Heald brand names, shed 13% of its value after reporting its fourth-quarter earnings results and providing fiscal 2014 guidance.

So what: For the quarter, Corinthian reported a nearly 3% decline in revenue to $377.5 million as EPS came in at $0.05, $0.01 better than expectations. The train left the tracks when Corinthian issued its upcoming quarter and full-year guidance. For the first-quarter of 2014, it sees student growth of negative 6%-8%, revenue of $372 million to $382 million, and an EPS loss of $0.06-$0.09 when expectations had called for revenue of $393.2 million and a profit of $0.04. The company blamed tough first-quarter comparisons last year as to why its year-over-year online enrollments are expected to fall in the first-quarter. For the full-year, Corinthian is forecasting positive student enrollment and EPS of $0.10-$0.15 as compared to the consensus of $0.23.

Now what: For-profit educators are still under quite a bit of pressure with U.S. regulators closely monitoring how they advertise to, and make loans for, prospective students. Corinthian is clearly struggling under tighter regulations to grow its enrollment, and it also ended 2013 with $26 million less in cash than the previous year. Until there are clear signs enrollment is improving, I'd suggest keeping a safe distance from Corinthian Colleges -- otherwise, you may be sent to detention along with this stock.

Why chase companies with a sketchy earnings history when it's been shown that solid companies selling at depressed prices are what have helped generations of the world's most successful investors preserve capital, minimize risk, and achieve long-term, market-trampling returns. If you'd like to find out about one such company, you can read our free report: "The One REMARKABLE Stock to Own Now." Just click here to get started.

The article Why Corinthian Colleges Shares Went to Detention originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.