The Gory Details on ITT Educational Services's Double Miss

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ITT Educational Services (NYS: ESI) reported earnings on July 25. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), ITT Educational Services missed estimates on revenues and missed estimates on earnings per share.

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


Margins contracted across the board.

Revenue details
ITT Educational Services notched revenue of $259.9 million. The 10 analysts polled by S&P Capital IQ hoped for sales of $272.9 million on the same basis. GAAP reported sales were 21% lower than the prior-year quarter's $329.8 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.89. The 12 earnings estimates compiled by S&P Capital IQ predicted $0.93 per share. GAAP EPS of $0.89 for Q2 were 55% lower than the prior-year quarter's $1.96 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 52.4%, 490 basis points worse than the prior-year quarter. Operating margin was 13.5%, 1,000 basis points worse than the prior-year quarter. Net margin was 8.0%, 590 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $257.1 million. On the bottom line, the average EPS estimate is $0.73.

Next year's average estimate for revenue is $1.07 billion. The average EPS estimate is $3.84.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 336 members out of 402 rating the stock outperform, and 66 members rating it underperform. Among 130 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 103 give ITT Educational Services a green thumbs-up, and 27 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 $19.00.

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The article The Gory Details on ITT Educational Services's Double Miss originally appeared on Fool.com.

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. The Motley Fool has no position in any of the stocks 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 Motley Fool has a disclosure policy.

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