Category Archives: For-profit Education

WPO 10-K Highlights – Program Review at Kaplan University, Kaplan Resolves 25% CDR Issue at a Few Schools

March 4, 2010 – 1:30 pm

We recently discussed WPO’s 4Q09 results, which have prompted a 5.8% rally in shares.  In our review, we highlighted how we were eagerly anticipating the release of WPO’s 10-K, which we hoped would include more extensive disclosure on regulatory compliance and operating metrics at Kaplan Higher Education, the company’s largest division.  WPO recently issued its [...]

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WPO 4Q09: Margin Improvement at Newspaper and Broadcasting Divisions Overshadow Sequential Decline in Margins at Kaplan Higher Education

February 24, 2010 – 1:20 pm

WPO reported 4Q09 results this morning. You can read all of the details here.  The company’s revenue and EPS of $1.238 billion and $8.71 beat the lone set of analysts estimates out there of $1.16 billion and $3.21.  In the table below we outline how each of the company’s operating divisions performed relative to our [...]

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Chart of the Week: Do Your Remember When APOL Was Known For Enrolling High Quality Working Adults?

February 21, 2010 – 2:49 pm

Our entry for chart of the week is sure to send a painful reminder to shareholders of APOL about Friday’s sell-off.  APOL provided initial guidance for its 2Q10 earnings which were well below consensus expectations.  The primary culprit – bad debt expense.  APOL management expects bad-debt expense as a percentage of revenue to be 6.8-7.1% [...]

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ESI 10-K Highlights, the “More You Learn, the More You Earn” Student Covenant Continues to Slip Away While Cohort Default Rates Remain Surprisingly Low

February 21, 2010 – 12:08 pm

ESI released its annual 10-K filing on Friday. We wanted to provide you with a few key observations and revisit some of the original tenets of our short thesis on the stock.  Overall, there was nothing in the 10K that we would characterize as “earth shattering”, although we anticipate many investors will be interested to [...]

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COCO Continues to Struggle With High Cohort Default Rates – “Self Regulation” Is Not Only Likely, It’s Necessary

February 9, 2010 – 11:33 am

In an 8-K filing this morning, COCO disclosed its draft 2-year cohort default rate (CDR) data for FY08, which was released to schools yesterday.   Under the 2-year definition cohort default rates must not exceed 25% for any school for three consecutive years, or 40% in any single year, or that institution will lose access to federal financial [...]

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Quick Comments on COCO’s 2Q10 Results: Higher Retention Sparks Revenue Upside, Starts Fall Short, EPS Beat Driven by Facility Leverage, Lower Cost-per-Start – When Are We Going to Get Real Bad-Debt Expense Disclosure?

February 2, 2010 – 10:35 am

COCO reported 1Q10 results this morning.  You can read the full press release here. Overall the company delivered upside to consensus on both the top and bottom-line, which should not come as a surprise given the strong results delivered by ESI and DV already this earnings season.  Revenues and EPS of $414.3 million and $0.44 beat [...]

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PAA Research For-Profit Education Survey Suggests Enrollment Growth for the Winter Term Remained Robust, Some Slowdown Expected in 2010, and Some Schools Have Already Introduced “Self Regulation”

January 26, 2010 – 4:39 pm

We recently conducted a survey of privately-held for-profit postsecondary education institutions.  Our goal was to gain a better understanding of enrollment trends, identify which programs are resonating most with the education consumer, evaluate lead flow trends, learn more about cost-per-lead expectations in 2010, and to determine how institutions are preparing for the transition from a [...]

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ESI 4Q09 Preview: The Last Days of Operating Margin Leverage?

January 19, 2010 – 5:50 pm

ESI will report 4Q09 results on Thursday, before the market opens.  Here are the issues which we expect to be at the forefront of investor concerns heading into and subsequent to the company’s earnings release:

Sustainability of enrollment growth – On the heels of APOL’s 1Q10 results, we think investors are increasingly concerned about the implications [...]

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Unofficial FY07 3-Year Cohort Default Rates Come In-line With Expectations, Now Comes the Hard Part for COCO and WPO

December 14, 2009 – 6:51 pm

The Department of Education released unofficial 3-year cohort default rate data this morning.  You can find the DOE’s press release here, which also contains a link to an excel file with school by school 3-year cohort default rate data.  Overall, the data was more or less inline with our expectations.  The addition of an extra [...]

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Preparing for the Release of Unofficial 3-Year Cohort Default Rate Data – Follow the Script, At the Very Least Self-Regulation Is on Its Way

December 9, 2009 – 12:37 pm

We have expressed our concerns in the past about the impact the transition from a 2-year to a 3-year cohort default rate calculation could have on the for-profit education sector.  As a reminder, as part of the Higher Education Opportunity Act of 2008 the calculation of the cohort default rate was expanded from 2-years to [...]

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