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DeVry Education Group Inc. (DV - Free Report) reported solid second-quarter fiscal 2017 results, with earnings beating the Zacks Consensus Estimate and revenues coming almost in line. DeVry’s earnings were driven by solid performance of its International and Professional Education segment.
Second-quarter fiscal 2017 adjusted earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 73 cents by 16.4%. On a year-over-year basis, the company’s earnings grew 25%.
DeVry’s quarterly net sales of $456.4 million missed the Zacks Consensus Estimate of $459 million by 0.6%. Total revenue was however almost in line with the year-ago figure of $456.2 million.
Segment Details
Medical and Healthcare: Medical and Healthcare is the company’s largest segment at present. It consists of DeVry Medical International, Chamberlain College of Nursing and Carrington College.
For the second quarter, segmental revenues of $233.9 million decreased 0.2% from the prior-year quarter, as growth at Chamberlain College of Nursing was offset by a decline at Carrington College and DeVry Medical International. Operating income at the segment, barring special items, was $48.2 million, up 14.2% from the prior-year quarter.
At Chamberlain College of Nursing, revenues rose 7.8% and operating income grew 22%. The upside was mainly driven by significant demand for skilled nursing professionals. However, management noted that a slowdown in Chamberlain's revenue momentum was partly due to a change in the school's BSN curriculum in line with State requirements. This change will likely continue to impact near-term revenues.
Last November, new student count increased 3.2%, raising the total student count by 10.2%. However, in Jan 2017, new students declined 3% while total students grew 6.6%. The downside was due to enrollment caps on certain campuses that offset continued enrollment growth from DeVry’s RN to BSN and Family Nurse Practitioner programs.
Revenues at DeVry Medical International was down 3.6% to $88.5 million. In January, new student enrollment decreased 10.8% and total students dropped 8% at DeVry Medical International.
Revenues at Carrington College dropped 14.1%. At Carrington College, new students declined 22.7% and total student count deteriorated by 18%.
International and Professional Education: The segment includes professional exam review and training operations of Becker Professional Review and DeVry Brasil.
The segment recorded revenues of $100.8 million, up 61.5% year over year, mostly driven by acquisitions and year-over-year growth in total enrollment.
Operating income was $13.6 million, up 74.4% year over year.
DeVry Brasil’s revenues increased 83% year over year, primarily driven by the acquisition of Ibmec as well as organic enrollment growth.
Professional Education revenues increased 22.6% during the quarter, driven by the acquisition of ACAMS, which offset declines in Becker CPA and Healthcare.
Business, Technology and Management: This segment includes operations of the company’s largest subsidiary, DeVry University, which offers both graduate and undergraduate courses.
The segment recorded revenues of $122.4 million, down 23.6% year over year owing to continued enrollment decline at DeVry University.
Operating income for the segment in the quarter, excluding special items, grew nearly 30% over last year.
In Nov 2016, undergraduate new student enrollments improved 7.2% while total students fell 20.3%. In this year’s January session, undergraduate new student enrollments declined 16.7% and total student count fell 21.6%
Guidance
Third-quarter fiscal 2017 revenues are expected to decline 3% to 4% year over year. Operating costs before special items are expected to decrease 1–2 %.
For fiscal 2017, revenues are expected to be flat to down 1%.
Earnings (before special items) are likely to increase in the low double digits versus the prior expectation of mid-single digit growth.
Capital spending is expected in the $65–$70 million range. The effective income tax rate for the fiscal is likely to be approximately 20–21%, before special items.
Universal Technical Institute, Inc. (UTI - Free Report) reported adjusted loss of 9 cents per share in the first quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of 10 cents by 10%. In the year-ago quarter, the company had posted loss per share of 3 cents. Quarterly earnings were adjusted for severance costs.
Upcoming Peer Releases
Capella Education Co. and Strayer Education Inc. (STRA - Free Report) are scheduled to release quarterly numbers on Feb 14 and Feb 16, respectively, before the opening bell.
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DeVry Education (DV) Beats Q2 Earnings, Misses Revenues
DeVry Education Group Inc. (DV - Free Report) reported solid second-quarter fiscal 2017 results, with earnings beating the Zacks Consensus Estimate and revenues coming almost in line. DeVry’s earnings were driven by solid performance of its International and Professional Education segment.
Second-quarter fiscal 2017 adjusted earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 73 cents by 16.4%. On a year-over-year basis, the company’s earnings grew 25%.
DeVry’s quarterly net sales of $456.4 million missed the Zacks Consensus Estimate of $459 million by 0.6%. Total revenue was however almost in line with the year-ago figure of $456.2 million.
Segment Details
Medical and Healthcare: Medical and Healthcare is the company’s largest segment at present. It consists of DeVry Medical International, Chamberlain College of Nursing and Carrington College.
For the second quarter, segmental revenues of $233.9 million decreased 0.2% from the prior-year quarter, as growth at Chamberlain College of Nursing was offset by a decline at Carrington College and DeVry Medical International. Operating income at the segment, barring special items, was $48.2 million, up 14.2% from the prior-year quarter.
At Chamberlain College of Nursing, revenues rose 7.8% and operating income grew 22%. The upside was mainly driven by significant demand for skilled nursing professionals. However, management noted that a slowdown in Chamberlain's revenue momentum was partly due to a change in the school's BSN curriculum in line with State requirements. This change will likely continue to impact near-term revenues.
Last November, new student count increased 3.2%, raising the total student count by 10.2%. However, in Jan 2017, new students declined 3% while total students grew 6.6%. The downside was due to enrollment caps on certain campuses that offset continued enrollment growth from DeVry’s RN to BSN and Family Nurse Practitioner programs.
Revenues at DeVry Medical International was down 3.6% to $88.5 million. In January, new student enrollment decreased 10.8% and total students dropped 8% at DeVry Medical International.
Revenues at Carrington College dropped 14.1%. At Carrington College, new students declined 22.7% and total student count deteriorated by 18%.
International and Professional Education: The segment includes professional exam review and training operations of Becker Professional Review and DeVry Brasil.
The segment recorded revenues of $100.8 million, up 61.5% year over year, mostly driven by acquisitions and year-over-year growth in total enrollment.
Operating income was $13.6 million, up 74.4% year over year.
DeVry Brasil’s revenues increased 83% year over year, primarily driven by the acquisition of Ibmec as well as organic enrollment growth.
Professional Education revenues increased 22.6% during the quarter, driven by the acquisition of ACAMS, which offset declines in Becker CPA and Healthcare.
Business, Technology and Management: This segment includes operations of the company’s largest subsidiary, DeVry University, which offers both graduate and undergraduate courses.
The segment recorded revenues of $122.4 million, down 23.6% year over year owing to continued enrollment decline at DeVry University.
Operating income for the segment in the quarter, excluding special items, grew nearly 30% over last year.
In Nov 2016, undergraduate new student enrollments improved 7.2% while total students fell 20.3%. In this year’s January session, undergraduate new student enrollments declined 16.7% and total student count fell 21.6%
Guidance
Third-quarter fiscal 2017 revenues are expected to decline 3% to 4% year over year. Operating costs before special items are expected to decrease 1–2 %.
For fiscal 2017, revenues are expected to be flat to down 1%.
Earnings (before special items) are likely to increase in the low double digits versus the prior expectation of mid-single digit growth.
Capital spending is expected in the $65–$70 million range. The effective income tax rate for the fiscal is likely to be approximately 20–21%, before special items.
DeVry currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DeVry Education Group Inc. Price, Consensus and EPS Surprise
DeVry Education Group Inc. Price, Consensus and EPS Surprise | DeVry Education Group Inc. Quote
Peer Release
Universal Technical Institute, Inc. (UTI - Free Report) reported adjusted loss of 9 cents per share in the first quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of 10 cents by 10%. In the year-ago quarter, the company had posted loss per share of 3 cents. Quarterly earnings were adjusted for severance costs.
Upcoming Peer Releases
Capella Education Co. and Strayer Education Inc. (STRA - Free Report) are scheduled to release quarterly numbers on Feb 14 and Feb 16, respectively, before the opening bell.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>