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ESI 10-K Highlights, the “More You Learn, the More You Earn” Student Covenant Continues to Slip Away While Cohort...

March 12th, 2010

This report was originally published on 2/21/10.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...

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PAA Research For-Profit Education Survey Suggests Enrollment Growth for the Winter Term Remained Robust, Some Slowdown...

March 12th, 2010

This report was originally published on 1/26/10.We recently conducted a survey of privately-held for-profit postsecondary education institutions.  Our goal was to gain a better understanding of...

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ESI Reports a Solid Quarter, New “Private Student Loan Program” Optically Looks Good, Economically “Kicks the Can...

March 12th, 2010

This report was originally published on 1/21/10.ESI reported 4Q09 results this morning. You can read the full press releasehere. Overall we would characterize the results as a solid beat relative to...

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

March 12th, 2010

This report was originally published on 1/19/10.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...

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The Dept. of Education Fires A Shot Across the Bow of the Higher Learning Commission (HLC)

March 11th, 2010

This report was published on 12/17/09.The education stocks are trading off today following the release of a memorandum from the Department of Education’s Office of Inspector General (OIG).   You can find the memorandumhere. ...

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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

March 11th, 2010

This report was originally published on 12/14/09.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...

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Preparing for the Release of Unofficial 3-Year Cohort Default Rate Data – Follow the Script, At the Very Least...

March 11th, 2010

This report was originally published on 12/9/09.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...

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Details of Department of Education Negotiated Rulemaking Proposals Leak Out – Incentive Comp and Program...

March 11th, 2010

This report was originally published 12/1/09.The U.S. Department of Education (DOE) distributed its first round of proposals to the negotiated rulemaking panel on Monday on Program Integrity Issues...

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Apollo Group’s 4Q09 Results Send Shockwaves: Could the SEC Inquiry Relate to Accounting for Student Withdrawals? APOL...

March 11th, 2010

This report was originally published 10/28/09.Readers of our research know that we have been bearish on the for-profit education sector for the past few quarters based on our concerns about growing...

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Quick Thoughts on ESI’s 3Q09 Results: Low Quality EPS Beat, Bad-Debt Expense Continues to Grow, First Ever Seq....

March 11th, 2010

ESI reported 3Q09 result this morning. You can find the release here.  Overall the company beat by approximately $5 million on the topline and $0.03 on the bottomline. Here are our quick...

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ESI 3Q09 Preview, Backing Into FY10 Consensus – Margins Don’t Grow to the Sky Do They?

March 11th, 2010

This report was originally published 10/21/09.ESI reports 3Q09 earnings and fall term enrollments Thursday morning.  In general, we have discussed at great length our concerns about what we view as structural issues with the...

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At Least For Now For the Bulls In For-Profit Education “It Just Doesn’t Matter”, Next Up Earnings and “NegReg”

March 10th, 2010

This report was originally published 10/14/09.A hearing was held today by the House Committee on Education and Labor entitled: “Ensuring Student Eligibility Requirements for Federal Aid”.  You...

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A Question of Recourse – The GAO Report Might Not Have Been As Bad As Feared, but It Still Confirmed Our Short Thesis

March 10th, 2010

This report was originally published on 9/22/09.For those of you that have followed our research since inception, you are probably intimately familiar with our concerns about the for-profit education...

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The Winners and Losers from the FY07 Cohort Default Data

March 10th, 2010

This report was originally published on 9/15/09.Yesterday, the Department of Education released student loan cohort default rate data for the 2007 fiscal year.  Overall, the national student loan cohort default rate (CDR) increased from 5.2% to 6.7%.  As we...

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Preparing for the Release of the Final FY07 Cohort Default Data – Which Stocks Could Be Impacted

March 10th, 2010

This report was originally published on 9/11/09.On Monday or Tuesday of next week, the Department of Education will release final cohort default data for FY07.  Before we get into company specific discussions, we wanted...

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ESI’s Bad-Debt Expense and Questions We Would Like Answered on ESI’s Conference Call

March 9th, 2010

This report was originally published on 7/23/09.ESI reported 2Q09 results this morning. You can get all of the details here. Overall the company reported bigger upside to consensus estimates than we expected ($317.1MM and $1.87...

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Performance of Sallie Mae’s “Non-Traditional” (aka for-profit) Loan Book Looks Frightening, A Few Thoughts on...

March 9th, 2010

This report was originally published 7/22/09We wanted to highlight a few details from Sallie Mae (SLM 12.21 ↓0.65%)’s earnings release last night and subsequent conference call that we think...

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Can the Income Based Repayment Plan Save ESI from A Tidal Wave of Student Loan Defaults?

March 9th, 2010

This report was originally published on 7/5/09.In our original post on ITT Educational Services, Inc., we argued that the company’s business model was structurally broken because it was no longer clear that students earned a...

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Survey Shows the Elasticity of Demand Is Starting to Creep Into the Higher Education Sector – The Acceptance Rates at...

March 8th, 2010

This report was originally published on 6/11/09.One of the more remarkable aspects of the U.S. higher education system over the past two decades has been the relative inelasticity of demand in...

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U.S. News and World Report Article Highlights Debt Burden of Students Attending For-Profit Colleges

March 8th, 2010

This report was originally published on 5/22/09.U.S. News and World Report published an article yesterday which highlighted a new report that outlines the characteristics of student loan borrowers with excessive debt....

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The Bulls Are Going to Like the Headline Numbers for ESI’s 1Q09, but Some of the Balance Sheet and Cash Flow Details...

March 7th, 2010

This report was originally published on 4/23/09ESI reported strong 1Q09 enrollment, revenue and EPS. The company repurchased stock. They raised guidance by approximately $0.50, on the heels of an...

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Some Quick Thoughts on the Credit Suisse For-profit Education Sector Downgrade and ESI’s Upcoming Earnings Release

March 7th, 2010

This report was originally published on 4/21/09.The leading for-profit postsecondary education providers APOL, CECO, COCO, DV, ESI, STRA  all sold off in excess of 5% today following a series of...

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