Back to top

Analyst Blog

DeVry Education Group Inc. (DV - Analyst Report) is set to report the second-quarter fiscal 2014 results on Feb 4, after the market closes. Last quarter, it posted a negative earnings surprise of 4.35%. Let’s see how things are shaping up for this announcement.

Factors to Consider this Quarter

The company has been struggling with its top line as the relatively strong growth in the healthcare and international businesses (growth institutions) is being offset by revenue declines at the struggling flagship DeVry University which accounts for half of the company’s revenues. DeVry University has been witnessing persistent enrollment declines as a result of overall economic downturn and lack of student confidence which has reduced demand. Many other schools like Apollo Education Group, Inc. (APOL - Analyst Report) and ITT Educational Services have also been hurt by the weak student demand.

Enrollment trends at DeVry University are not expected to improve much in fiscal 2014. In the second quarter, revenues are expected to grow at all institutions, except DeVry University.

Regarding costs, total operating costs are also expected to increase slightly year over year in the second quarter. Costs at growth institutions (like Chamberlain, Ross, Becker and DeVry Brasil) are expected to increase sequentially. However, at transition institutions (like DeVry University and Carrington), costs are expected to decline both year over year and sequentially.

Earnings Whisper?

Our proven model does not conclusively show that DeVry is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Negative Zacks ESP:  The Earnings ESP is -1.33%. That is because the Most Accurate estimate stands at 74 cents while the Zacks Consensus Estimate is higher at 75 cents. That is a difference of -1.33%.

Zacks Rank #4 (Sell): We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

K12, Inc. (LRN - Snapshot Report), with Earnings ESP of +12.1% and a Zacks Rank #3 (Hold).

Universal Technical Institute, Inc. (UTI - Analyst Report), with Earnings ESP of +100.0% and a Zacks Rank #3.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.80 +7.04%
BANCO DO BR… BDORY 14.74 +5.66%
AIR INDUSTR… AIRI 9.99 +4.15%
EQT MIDSTRE… EQM 98.14 +3.38%
WEATHERFORD… WFT 23.64 +3.10%