67 WALL STREET, New York - September 9, 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: FactSet Research Systems Inc. (FDS), IHS Inc. (IHS), Moody's Corp. (MCO), Apollo Group Inc. (APOL), Bridgepoint Education, Inc. (BPI), Strayer Education Inc. (STRA), Grand Canyon Education, Inc. (LOPE), American Public Education, Inc (APEI), DeVry, Inc. (DV), ITT Educational Services Inc. (ESI), Universal Technical Institute (UTI) and many more.
In the following excerpt from the Education Report, an expert analyst discusses the outlook for the sector for investors:
TWST: You mentioned this being an increasingly crowded and competitive market. Do you see any of the stronger companies doing anything in particular to stand out and be more competitive?
Mr. Appert: I think in this crowded and commoditized market, if you don't have a differentiated offering, if you don't have differentiated positioning, you really are lost in the large universe of potential options for students. It's very hard to grow your enrollments in the context of what is, essentially, substantially increased capacity in an industry where there hasn't been tremendous growth in demand.
What's changed versus five years ago is that the not-for-profit educational institutions have become much more active in terms of offering programs that were once the exclusive domain of the for-profit companies. A prime example would be the adult degree completion market, the market that Apollo (APOL), Bridgepoint (BPI) or Strayer (STRA) compete. You have a large number of not-for-profits who either have new programs or expanded programs to serve this audience. Some of the bigger, well-known ones would include University of Maryland, University of Southern New Hampshire and Drexel University.
There are quite a number of schools that have become active in the market, and so you've created substantial incremental capacity at a time when demand has been static or even declining. This leads to the supply/demand equation getting out of balance, and this has really worked to the disadvantage of the for-profit entities.
It gets back to a core part of my investment thesis, which is if you're offering undifferentiated programs in these crowded and competitive markets, it's hard to make a case for meaningful enrollment growth, and without enrollment growth it's hard to make a case for sustained margins and profitability. The key challenge, then, is differentiated positioning in this slower growing and...
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