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Bear of the Day: Corinthian Colleges (COCO)

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Corinthian Colleges (COCO) is coming off a large negative earnings surprise and is a Zacks #4 Rank (Sell).

Company Description

Corinthian Colleges operates as a post-secondary education company. It offers various diploma programs, as well as associate's, bachelor's, and master's degrees. As of June 30, 2012, it operated 100 schools in 26 states of the United States and 16 schools in the province of Ontario, Canada with a total of 91,460 student enrollments under the Everest, WyoTech, and Heald brand names. The company was founded in 1995 and is based in Santa Ana, California.

COCO Big Miss

The most recent quarter saw the company miss the Zacks Consensus Estimate by a large amount. The company reported earnings of $0.05 per share while the consensus estimate was calling for $0.07. That translates to a $0.02 miss or 28.5%. The stock fell 8% in the session following the release.

Landscape Shifting

The for profit education sector has seen a large shift in the landscape. More traditional college like Stanford and The Ohio State University have begun offering courses online and in many cases for free. This has resulted in significant pressure on new enrollment numbers for all the companies in this sector.

COCO Sees Estimates Moving Lower

Estimates for COCO have been sinking of late. The Zacks Consensus Estimate for 2012 for AM stood at $0.39 as of May 2012. The consensus has since moved lower to $0.23. Over the same time period estimates for 2013 have moved from $0.52 to $0.33.


The valuation metrics for COCO are low, but don't think there is a lot of value in this stock. The trailing PE of 6.5x is less than half the 14x industry average, while the forward PE of 10x has the company trading much closer to the industry average of 13x. Price to book of 0.3x is well below the 2x industry average and price to sale is also quite low at 0.1x compared to 2x industry average.

The Chart

The price and consensus chart shows how the stock has been sliding for the last several years. The trend of earnings starting off high in the new year and sinking lower is apparent in the movement of the colored lines. The stock is a Zacks Rank #4 (Sell)

Corinthian Colleges - ticker COCO>

Brian Bolan is a Stock Strategist for He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio

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