Lincoln Educational Services Corp.

Company Description

Lincoln Educational is a leading and diversified for-profit provider of a career-oriented post-secondary education headquartered in West Orange, New Jersey. It offers recent high school graduates and working adults degree and diploma programs in four principal areas of study: automotive technology, allied health (which includes programs for medical administrative assistants, medical assistants, pharmacy technicians and massage therapists), skilled trades and business and information technology.

Record Revenue

When Lincoln reported first-quarter results on May 6 it included record revenue of $118.6 million. Revenue rose 41% on a year-over-year basis. New student starts grew by more than 42%, up from 35% in the same quarter of 2008.

Earnings per share came in at an astounding 22 cents per share, 11 times the same period one year ago. EPS also trounced the consensus estimate of 4 cents per share. This was the company's sixth consecutive surprise.

Guidance Projects Continued Growth

In the same announcement the company increased its full-year guidance. Revenues are expected to be $510 million, up 35% from 2008. Earnings per shares is expected to grow at least 60% to between $1.25 and $1.30.

Analysts' estimates are coming in at the higher end of the range for this year, averaging $1.29 which is 34 cents higher than prior to the revised guidance. The consensus estimate for 2010 is now averaging $1.56, up 43 cents since the earnings release.

These forecasts, if met, would yield growth rates of 66% for the current year and another 21% for 2010.

Good Value to Boot

Shares of LINC are trading at 19 times earnings, which is well below the industry average of 25 times. The forward P/E is an attractive 13 times earnings and the PEG ratio is just 0.8.

The Chart

LINC has been outperforming the S&P 500 by a significant margin over most of the past six months. Take a look at the chart below.