Why Career Education Stock Skyrocketed
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 Career Education were flying high today, up as much as 71% after the company agreed to sell its European education properties.
So what: The for-profit educator said it would unload its entire International schools segment, which includes the Paris-based INSEEC Group and the International University of Monaco to the private equity firm Apax Partners. The sale price is $305 million, and Career Education expects $276.5 million when the transaction closes. CEO Scott Steffey said, "Redeploying capital from Europe to the United States is the right move for Career Education. It will help us best serve the vast majority of students, and return the best value for investors."
Now what: Considering that its European division had contributed just 9% of sales in 2012, the move looks like a savvy one for Career Education as that chunk of its business is being valued at more than 10 times the stock as a whole, though Steffey noted that it had shown steady enrollment growth over the past several years. Still, Career Education's proceeds from the sale were greater than its market cap based on yesterday's closing price, making the deal seem like a no-brainer. The company will report earnings Nov. 6. Analysts are expecting a loss of $0.53 a share on $255.5 billion in revenues. Given the expected losses over the next several quarters, today's news might be a good time to sell.
Stocks that keep growing and growing and growing
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.
The article Why Career Education Stock Skyrocketed originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. 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.