ITT Educational Services Inc.

Company Description

ITT Educational Services provide career-focused degree programs, with an emphasis on technology. The company has over 100 locations across the United States and currently have approximately 62,000 students enrolled in classes. Each location is nationally accredited by the U.S. Department of Education. ITT carries a market cap of $3.4 billion.

Earnings up 31%

ITT announced third-quarter results on Oct 23 including a new student enrollment increase of 19%, year-over-year. Total student enrollment is up 15% since the third quarter of 2007.

The company reported earnings per share of $1.28, 31% higher than the same quarter last year. The increase was driven by a 17% boost in revenues and a more efficient operating margin, not 31.8% up from 28.9%.

Plenty of Credit Available

Modany, ITT's CEO, said that private lenders do not anticipate any new restrictions for the rest of 2008. He continued, "Our students continue to have unrestricted access to federal student loans through a variety of lenders..."

Benefits of a Slow Economy

When the economy slows, unemployment rises, many look to improve their resumes by heading back to school. Not only is there a bump in enrollment, but the company also saw costs lower, as competition for advertising slots were significantly reduced.

Now Located in 36 States

On Oct 3 ITT announced its newest school, located just north or Jackson Mississippi. The campus will be open for the quarter beginning in Dec 2008.

ITT now has 103 schools in 36 states.

Analyts Are Bullish

The consensus estimates have been on the rise since the recent earnings announcement. Full-year 2008 estimates currently average $4.99 per share, up from $4.74 one month ago and 35% higher than 2007.

ITT's long-term growth rate is 18%, and fairly priced with a PEG ration of 1.0.

The Chart

Shares of ESI have been red hot since the Oct 23 announcement. Take a look at the chart below.