ITT Educational Services, Inc. (NYSE:ESI)

Short Squeeze candidate

Based upon historical earnings growth, I think this stock should be valued near $259.25 using discounted cash flows over the next 5 years. This produces a safety margin of 77%. The biggest downside that I see is that it is widely shorted, which may drive the price down in the near term.

It's a very simple play, for profit colleges are enrolling ever fewer students because they are not only expensive, but of dubious value. This is not something seen at just one college, but look at all the for profits. They may beat eps, but ever declining new students will mean continue decline in earnings creating a vicious cycle of ever lower p/e. Until they fundamentally prove their worth and get it out, I don't see how they are going to succeed in the long term.

This stock is really cheap right now. Take advantage of it.

http://finance.yahoo.com/q/co?s=DV+Competitors

buying back stock at depressed prices like no tomorrow... or rather, like there is a tomorrow.

dont like this much but will outperform for the next few weeks then down it will go

Good cash-flow. Insider buying.

Got notice as #1 Greenblatt stock as of May 26, 2011.

magic formula

lots of upside, low fcf estimate its fairly valued, returns to last years CFs could double, if it returns to growth it could be a triple or more. many behavioral biases involved here

Covestor Model Manager Czar Reyes bought ESI in his Abandon Stock Covestor Model ( http://covestor.com/Czar-Reyes )

ESI has the lowest PE in the sector, a strong management team and a lot of interest from the PE world.

Excellent MFI statistics

I don't believe the govt will do too much to disrupt for-profit schools. There isn't enough non-profits for everyone that needs an education. There'll probably be increased accountability and regulation in the industry but hopefully it shouldn't be too bad.

Really Cheap valuation, solid company in a hated industry. Be greedy when others are fearful.

intrinsic value ranges around 150

http://caps.fool.com/Blogs/fundamental-analysis-on-esi/470715

With only a few exceptions, the for-profit education sector is doomed, especially those which are heavily dependent on online revenue. Ultimately their doom won't be attributable to government intervention; that might just speed up the inevitable. The problem is competition from traditional universities, which are increasingly running for-profit ventures, as I've seen firsthand in the education industry. Competition from real universities is something most investors don't understand: most of these traditional schools are now offering online and continuing education courses, often in remote parts of the globe, that use precisely the same business models that outfits like Phoenix are using. Universities finance their traditional programs out of these for-profit enterprises. These schools have a huge leg up on the for-profit colleges: (a) zero taxes on endowment gains; (b) a reputable name/accreditation; (c) government support in the form of subsidies, grants, etc. Meanwhile, the for-profit schools only have tons of research showing that for-profit schools are the equivalent of quicksand for students. The only thing that the for-profit schools have going for them is the insistence that the free market can do everything more efficiently -- to which one can only reply: the traditional colleges have already figured that one out for themselves, and are heavily invested in for-profit strategies already.