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ITT Educational Services Inc. Message Board

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  • oxledge oxledge Jun 28, 2010 2:27 PM Flag

    Oxledge - Would appreciate your opinion.

    Glad to see that my commentary on the bozo Eisman testimony in front of the House Education Committee got some reasonable commentary. I think that this must be the first time in ages that there has been any legitimate discussion on this board.

    I am not surprised that the ESI short sellers did not bother to listen to the Eisman testimony. It simply shows how lacking they are in their due diligence.

    In response to poster chris68312394732497 (or whatever), regarding ESI's share price, it is simply impossible to predict where ESI shares will trade or how the market will value them on any particular day, week or month. But this is no different than any other stock. It was only just 8-9 weeks ago that ESI shares were being valued on a particular day at $121, up 26% for the year. I certainly didn't see the shorts crowing about their positions then. Now ESI shares are $86 and are down 10% year to date. This type of 30% share price move in ESI is completely ordinary. Happens all the time as anyone who looks at the price history can see.

    The reason for the recent share price drop recently is based on a 13% decline in the overall market (ESI shares are much more volatile than the market) and the recent fear regarding some unknown looming government action against the education sector. As I see it, those that have sold are clearly too scared to hold the shares while the psychology of some possible government regulatory action is on the negative side. I have never made any specific prediction as to where ESI shares will trade, although I am long from the $50's and think that fair value is much higher than current levels. I have yet to meet any person (long or short) that can predict where a share price will be. All those Netflix shorts have been saying for years that the company was toast. It is my belief that the current negative view by many towards the educational sector will pass. My viewpoint is that if there is any government action that is NOT significant (significant to me means something causing a 35% drop in ESI earnings), ESI shares are going to go higher. The need for educational services in the United States is enormous and Obama has dramatically increased the funds that are to go to post secondary education.

    Furthermore, if there is new government regulatory action of meaningful consequence, ESI shares are going to make an up move on a massive scale in my opinion. In such a case, shares will be valued on 2011 earnings well north of $12 per share, and most probably $13-14 per share. If the government overhang is removed, a p/e of 15-20 is easily achieved, implying a share price of $200 to $260.

    If there is some kind of government action that hurts ESI earnings, how much earnings hit has already been priced in with the shares at $86 and current estimates at $11.50? Looks to me like the market has already assumed a huge negative hit to ESI's earnings.

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    • Wow those ESI numbers look compelling, Ox. I'm going to get long right now..

      "The reason for the recent share price drop recently is based on a 13% decline in the overall market (ESI shares are much more volatile than the market)"

      ESI has a beta of .22, it doesn't move with the market--there's close to no relationship with the S&P. It is volatile, I'll give you that, but it has nothing to do with the broader market. Investors in education stocks are taking their profits while they still have some, and for good reason. What's going to happen when we go back to the days before Bush changed the cap on revenues from federal financial aid to "for-profits" from 50% to 90% and ESI has to lower its tuition so that it doesn't exceed whatever the new lower cap is determined to be?

      Have you ever read one of the many horror stories from the graduates of these colleges?

      Obama does want to teach more students, but he wants to make sure they learn something meaningful that will increase productivity. He doesn't want tax payers paying $16k a year for someone to become a janitor or a security guard at an airport. Obama is focused on 2-year colleges and making higher education affordable. How is an online program that cost 2x as much as a state school affordable, competitive, or beneficial to anyone except for the fraudsters at the top of the chain of these for-profits?

      APEI and EDU are the only good education stocks. The others are screwing over the education system.

 
ESI
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