SOURCE: Five Star Equities
NEW YORK, NY--(Marketwire - Oct 19, 2012) - For-profit education companies have struggled in 2012 as high unemployment rates and tighter admissions practices have led to lower enrollment numbers. Weak quarterly results from industry bellwether Apollo Group saw shares of for-profit education companies fall Wednesday. The Bloomberg U.S. For-Profit Education Index (USEDU) declined over 8 percent. Five Star Equities examines the outlook for companies in the Education & Training Services Industry and provides equity research on Apollo Group Inc. (NASDAQ: APOL) and DeVry Inc. (NYSE: DV).
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The industry has faced increased competition from companies offering online low-cost classes. As a result a number of companies have been taking new approaches to improve their bottom-line, and some schools are reducing expenses as companies try to offset declining revenues. Apollo plans to shut down a total of 115 locations (90 learning and student resource centers and 25 campuses).
"Education stocks are value traps, burdened by a downward bias in estimates, limited enrollment visibility and increasingly intense competitive dynamics," said Peter Appert, an analyst at Piper Jaffray & Co.
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Apollo Group, Inc. is one of the world's largest private education providers and has been in the education business for more than 35 years. Shares of the company fell over 20 percent, their biggest loss in 2 years, after reporting fiscal fourth-quarter earnings declined 60 percent, and new enrollment fell 14 percent.
DeVry offers a wide array of programs in business, healthcare and technology. DeVry's institutions serve students in secondary through postsecondary education and professionals in accounting and finance. The company is scheduled to release their third quarter fiscal 2013 financial results on October 25, 2012. Shares of DeVry have fallen over 40 percent year-to-date.
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