ITT Educational (ESI)
From Cabot Wealth Advisory 12/31/09 Sign up for free Cabot Wealth Advisory e-newsletter
A company that I like in the education services sector is ITT Educational (ESI), which offers post-secondary education programs to 79,000 students in 37 states. The company began offering technical courses in 1969 and now offers associate, bachelor's and master's degree programs in the disciplines of information and electronic technology, computer-aided drafting and design, criminal justice, health sciences and business.
ITT designs its course offerings based upon feedback from employers to help students become better prepared for the job market. Students can choose to take courses in regular classroom settings, online, or a combination of both.
The company indirectly offers federal student financial aid programs under the Title IV programs. In addition to Title IV loans, other funding is provided by the company in the form of student loans. Higher loan delinquencies will put a slight damper on earnings growth, but tuition increases will more than offset any losses.
ITT recently acquired Daniel Webster College, which will provide additional growth opportunities. Revenues increased 27% and EPS soared 48% during the last 12 months. We expect revenues to increase another 16% and EPS to rise 23% during the next 12 months. No dividend is paid. ESI shares are way undervalued at 10.7 times next 12-month EPS. Buy ESI now.
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J. Royden Ward
Editor of Cabot Benjamin Graham Value Letter
A lifelong investment professional, J. Royden Ward applies his 40 years of investment research, portfolio management, writing and publishing experience to his role as analyst and editor of Cabot Benjamin Graham Value Letter, which is directed to long-term investors seeking a guide to profitable value investing based on the time-tested systems originally developed by Benjamin Graham, the Father of Value Investing. A second-generation disciple of Benjamin Graham, Roy in 1969 pioneered the development of a computerized model that applied the formulas developed by Graham using a unique ranking system. Today, Roy applies his system to two models in the Value Letter.
|ITT Educational Services (ESI)
13000 North Meridian Street
Carmel, IN, U.S.A. 46032-1404
|Index Membership: S&P 400 MidCap, S&P 1500 Super Comp |
Industry: Education & Training Services
Full Time Employees: 4,620