DeVry Inc. Earnings Cheat Sheet: Increasing Costs Tighten Margins as Net Income Falls

S&P 500 (NYSE:SPY) component DeVry Inc. (NYSE:DV) reported its results for the first quarter. Through its wholly-owned subsidiaries, DeVry owns and operates DeVry University, Chamberlain College of Nursing, U.S. Education, Ross University, Becker Professional Education, and Advanced Academics.

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DeVry Earnings Cheat Sheet for the First Quarter

Results: Net income for the education and training services company fell to $57.5 million (83 cents per share) vs. $73.6 million ($1.03 per share) a year earlier. This is a decline of 21.9% from the year earlier quarter.

Revenue: Fell 0.5% to $519 million from the year earlier quarter.

Actual vs. Wall St. Expectations: DV fell short of the mean analyst estimate of 96 cents per share. Analysts were expecting revenue of $529 million.

Quoting Management: “DeVry University undergraduate and Carrington Colleges Group continue to face the same headwinds as many other institutions across our country’s educational system. Poor economic conditions and persistent unemployment continued to impact results, coupled with adjustments associated with new regulations,” said Daniel Hamburger, DeVry’s president and chief executive officer. “We continue to experience enrollment growth at DeVry University graduate, Chamberlain, Ross, AUC, DeVry Brasil, and Advanced Academics. This diversification helped to mitigate the declines, and resulted in total enrollment of about 123,000 students across all DeVry institutions, a decrease of less than one percent. Going forward, we will continue to invest in academic quality, execute on our diversification strategy, and control costs across our organization.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the fourth quarter of the last fiscal year, net income rose 5.1% from the year earlier, while the figure increased 14.5% in the third quarter of the last fiscal year, 22.4% in the second quarter of the last fiscal year and 34.5% in the first quarter of the last fiscal year.

From the fourth quarter of the last fiscal year, the company’s current liabilities rose to $462.7 million from $316.4 million.

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the first quarter of the last fiscal year, which saw revenue rise 21%.

Gross margin shrank 2.2 percentage points to 54.1%. The contraction appeared to be driven by increased costs, which rose 4.5% from the year earlier quarter while revenue fell 0.5%.

The company fell short of forecasts after beating estimates in the previous two quarters. In the fourth quarter of the last fiscal year, it topped the mark by 5 cents, and in the third quarter of the last fiscal year, it was ahead by 9 cents.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is $1.19 per share, down from $1.28 ninety days ago. At $4.43 per share, the average estimate for the fiscal year has fallen from $4.76 ninety days ago.

Competitors to Watch: Apollo Group, Inc. (NASDAQ:APOL), Career Education Corp. (NASDAQ:CECO), American Public Education, Inc. (NASDAQ:APEI), National American Univ. Hldgs., Inc. (NASDAQ:NAUH), Corinthian Colleges, Inc. (NASDAQ:COCO), Grand Canyon Education Inc (NASDAQ:LOPE), Bridgepoint Education, Inc. (NYSE:BPI), Education Management Corp (NASDAQ:EDMC), Strayer Education, Inc. (NASDAQ:STRA), and The Washington Post Co. (NYSE:WPO).

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(Source: Xignite Financials)

 

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