DeVry rises as 1Q results top Wall Street's view
NEW YORK -- Enrollments are still dropping at DeVry, but at a slower pace, helping the for-profit education company top analyst expectations in its latest quarter and driving up its shares Friday.
THE SPARK: DeVry Inc. said late Thursday that fiscal first-quarter earnings came to 49 cents per share on revenue of $482.7 million. That's down from a year ago, but Wall Street expected even more damage to its net income. Analysts polled by FactSet had predicted profit of 30 cents per share on revenue of $482.5 million.
At DeVry's biggest division, its undergraduate-level DeVry University, enrollments dropped 15 percent in the July-September quarter, and new student sign-ups slid nearly 9 percent. Total DeVry Inc. enrollments fell 6 percent.
THE BIG PICTURE: DeVry and other for-profit education companies have struggled for more than a year with the impact of new government regulations and increased scrutiny. Critics say the companies are providing poor education, graduating too few students and burdening many with excessively high debt. The federal government is requiring that schools meet certain criteria or risk losing access to federal student aid, which makes up much of a for-profit education company's revenue. In turn, companies have stiffened their admission standards. That has taken a toll on enrollment and revenue.
THE ANALYSIS: Cost cuts helped DeVry, said Citi Investment Research's James Samford in a client note. And while new undergraduate enrollment at DeVry University dropped 9 percent from a year earlier, it was still better than the 17 percent decline in the first quarter, he added. He raised the company's price target by $2 to $24.
SHARE ACTION: Shares of DeVry, based in Downers Grove, Ill., rose $5.17, or 25 percent, to $25.99 in midday trading. Shares have lost about a third of their value this year.