New Enrollment Growth the Leading Indicator of Strength in the Education Sector, Yet Does Not Truly Represent the Health of a Company: Expert Analyst Jeffrey Y. Volshteyn Shares How He Plays the Education Space

Wall Street Transcript

67 WALL STREET, New York - September 5, 2013 - The Wall Street Transcript has just published its Education Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Gainful Employment Clarification - Enrollment and Retention Trends - Economic Recovery and Enrollment Trends - Growth Drivers in Chinese Education Sector

Companies include: American Public Education, Inc (APEI), Apollo Group Inc. (APOL), Capella Education Co. (CPLA), Bridgepoint Education, Inc. (BPI), DeVry, Inc. (DV), ITT Educational Services Inc. (ESI), Grand Canyon Education, Inc. (LOPE), Strayer Education Inc. (STRA) and many more.

In the following excerpt from the Education Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What are your stock recommendations right now?

Mr. Volshteyn: The broader investment thesis is rather simple. We like low-tuition schools, and we don't like high-tuition schools. It's that simple. So with that premise, we like APEI, we like Grand Canyon. We are "underweight" on ITT Educational Services. We also like Apollo Group on the potential upside of the turnaround and restructuring of their operations.

TWST: In the next earnings reports, what will you be looking for?

Mr. Volshteyn: For the last eight to nine quarters, investors have been focused on new enrollments. New enrollment growth is essentially a leading indicator of total enrollments and reflects the strength of demand for specific programs. We recognize that only looking at new enrollments does not truly represent the health of a company.

When we are looking at several quarters of new enrollment declines, for example, the challenging part is to properly identify what portion of such decline comes from external reasons, such as competition, as opposed to internal initiatives focused on improving the quality of incoming classes.

Such internal initiatives may improve student retention, which in turn may improve graduation rates, which is one of the key student outcomes regulators are looking at. So going into this earning season we're looking for two things, new enrollment growth as well as rate of retention of continuing students. Retention rates are not easy to calculate, and companies basically need to disclose them to the investment community.

TWST: Are there any other topics you'd like to discuss?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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