ITT Educational Services, Inc. (NYSE:ESI)

CAPS Rating: 2 out of 5

The Company is a for-profit provider of postsecondary education in the United States. It offers diploma and associate, bachelor and master degree programs at a number of institutes.

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Member Avatar EvanBuck (99.91) Submitted: 9/20/2014 2:38:28 PM : Underperform Start Price: $4.95 ESI Score: +40.22

Obama has launched a thinly veiled assault on for-profit colleges. The recent collapse of Corinthian Colleges (NASDAQ:COCO) just goes to show the massive headwinds facing this industry. I do not expect ITT Educational Services, Inc. to be an exception. With the fact that the company is facing gargantuan legal troubles, combined with the market's dislike of for-profit education, I expect this stock to underperform.

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Member Avatar asilverp (67.92) Submitted: 8/26/2014 4:29:22 PM : Outperform Start Price: $8.38 ESI Score: -61.85

Magic formula pick, as others have commented. highly profitable. Also in an industry that will do well no matter what the rest of the economy does. Online degrees are hot.

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Member Avatar CheerUp (59.46) Submitted: 2/17/2014 3:29:10 PM : Underperform Start Price: $31.37 ESI Score: +92.97

ITT "college lite" under investigation for possible fraudulent student loans. Down from $45.80 Jan 22, 14 to $31.11 Feb 16, 14.

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Member Avatar mwiesel (< 20) Submitted: 8/13/2013 1:34:37 PM : Outperform Start Price: $29.05 ESI Score: -100.94

Very undervalued in the longterm. 100 year old, extremely profitable company that buys back shares like a beast. High cash on hand, low debt. The industry is going through regulation changes, esi has already turned the corner with new enrollment now hitting positive once again.

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Member Avatar MattHylland (42.49) Submitted: 4/9/2013 7:49:30 PM : Outperform Start Price: $12.46 ESI Score: -97.72

Probably dumb....big time contrarian play.

About a buck away from trading at it's cash value.

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Member Avatar kulls81 (< 20) Submitted: 11/29/2012 1:06:11 PM : Outperform Start Price: $17.93 ESI Score: -116.84

Magic Formula 11-29-12

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Member Avatar TrackHorowitz (32.79) Submitted: 2/1/2012 12:09:22 PM : Outperform Start Price: $67.55 ESI Score: -136.72

Short Squeeze candidate

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Member Avatar fthfool (95.49) Submitted: 9/21/2011 10:50:25 AM : Outperform Start Price: $62.76 ESI Score: -152.22

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

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Member Avatar GVinvesting (74.97) Submitted: 8/10/2011 12:08:54 PM : Outperform Start Price: $74.83 ESI Score: -159.08

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

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Member Avatar pbk100 (30.85) Submitted: 6/15/2011 1:04:29 PM : Outperform Start Price: $80.81 ESI Score: -143.62

Good cash-flow. Insider buying.

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Member Avatar jcpalmer (< 20) Submitted: 5/26/2011 5:12:51 PM : Outperform Start Price: $71.00 ESI Score: -136.24

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

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Member Avatar Covestor (65.62) Submitted: 3/11/2011 3:40:22 PM : Outperform Start Price: $71.67 ESI Score: -138.70

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

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Member Avatar john94901 (< 20) Submitted: 1/29/2011 8:07:41 PM : Outperform Start Price: $65.72 ESI Score: -141.74

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

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Member Avatar magicseeker (34.20) Submitted: 1/13/2011 11:21:58 AM : Outperform Start Price: $63.20 ESI Score: -141.04

Excellent MFI statistics

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Member Avatar hardrive118 (< 20) Submitted: 1/11/2011 4:09:38 AM : Outperform Start Price: $58.31 ESI Score: -141.95

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.

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Member Avatar Mstinterestinman (< 20) Submitted: 1/10/2011 6:03:02 PM : Outperform Start Price: $58.31 ESI Score: -141.95

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

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Member Avatar lionel319 (95.31) Submitted: 12/19/2010 8:06:12 PM : Outperform Start Price: $55.96 ESI Score: -154.90

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

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Member Avatar Matt8265 (27.84) Submitted: 10/27/2010 7:48:59 AM : Outperform Start Price: $62.06 ESI Score: -154.09

COCO, APOL, all of these are going up. The current prices match that of 5-7 years ago. Congress and the DOE are blowing smoke. America needs education even if Obama wants to "grease" teacher unions.

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Member Avatar SkidRowYourBoat (< 20) Submitted: 10/26/2010 11:14:18 PM : Outperform Start Price: $68.12 ESI Score: -155.99

After the educational legal financial issue sorts out schools for profit will regain profit. Traditional school just don't cut it. I think the whole educational business is a scam, but scams seems to be raking in profits. Here's to children being scammed out of money they have not made. To pipe dreams and following the herd. This we can bank on.

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Member Avatar MashkiaTsair (< 20) Submitted: 9/8/2010 11:04:14 AM : Outperform Start Price: $54.83 ESI Score: -163.75

-ITT Educational Services, Inc. (Public, NYSE:ESI)
stability: ****
Auditor: PricewaterhouseCoopers

Originally I gave this company a 4-star rating, because equity was less than 50%
of total assets, but after examing it's cashflow, I realized that
it covers debt easily, and revised my financial stability rating to 5-stars.
On 8.9.2010. I had to degrade rating back to 4-stars, after learning about their "PEAKS" program.

Lynch Category: Fast Growth.

3-year: (2009-2006)
rev.growth = 25% y/y for last 3 years. Earn.growth = 44% y/y, FCF growth = 38% ! (per share)

7-year: (2009-2002)
year 2002 = compay had 46,344,000 diluted shares.
rev.growth = 25% y/y for last 7 years. Earn.growth = 35% y/y, FCF growth = 20% ! (per share)

Found via Google Stock Screener.

*Company is actively buying back it's shares.
Company is doing 50% return-on-assets (ROA) (!) and 200%
return-on-equity (ROE) (!).
P/E=6.5, P/B=13

Both operating and profit margins are steadily increasing year-over-year.

Relative price: Considering the profit increase, and the total amount of shares decrease (due to buybacks),
the company is selling slightly cheaper now, in 2010, than even the darkest days of 2008 Financial Meltdown. (relative to EPS, not absolute share price)

It beats my Israeli high-quality stock position, "Roshtov", hands down on most parameters, including ROA, where both companies are doing *GREAT*.

Here is one such reason, why educational stocks are dropping in price:
http://www.marketwatch.com/story/analyst-study-on-corinthian-colleges-and-itt-educational-services-education-stocks-stress-test-2010-08-04?reflink=MW_news_stmp

Bad points:
1. Single Customer: Uncle Sam (U.S. via student loans)
--students themselves coming from low-income.
2. According to Fool.com, both students and teachers are unhappy.
This is red flag.
3. Yellow Flag: Started to underwrite or guarantee loans since Jan.2010. called "PEAKS" program.
http://studentlendinganalytics.typepad.com/student_lending_analytics/2010/01/itt-educational-services-rolls-out-the-peaks-program-a-new-private-loan-product.html
http://www.sec.gov/Archives/edgar/data/922475/000092247510000004/form8_k.htm
**This will result in $300 M of off-balance-sheet liabilities.
However, this is not yet a sell signal, because "General Electric" in 1929 followed a similar practices.

But it means, that I should not build a big position.
Potentially this company is GREAT, similar to Western Digital, but more risky.

3rd party analysis:
http://www.magicdiligence.com/articles/itt-educational-ESI-2009-11-24

Lessons Not Learned at ITT Educational Services:
http://www.bnet.com/blog/technology/lessons-not-learned-at-itt-educational-services/4107

Verdict: buy ESI at $56/share, but position should not be too big.

-MashkiaTsair

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