ITT Educational Services, Inc. (ESI), Walter Energy, Inc. (WLT): Two of Yesterday’s Big Disappointments

Yet even in beating Wall Street forecasts, Apollo showed what the problems are facing the sector: falling revenues, higher expenses, and dwindling student enrollments. When ITT Educational Services, Inc. (NYSE:ESI) reported fourth-quarter earnings in January, it saw all of those same factors, but it didn’t have the luxury of beating expectations. First-quarter results are due out later this month, and analysts are again looking for a dismal performance, with earnings falling 47% to $1.25 a share and revenues declining 19%. ITT Educational Services, Inc. (NYSE:ESI) is also under SEC investigation because it made arrangements with third parties to cover tuition costs not covered by federal loans, and lawyers have jumped in with class action lawsuits.

I’ve noted on numerous occasions that I don’t agree with the Obama administration’s attacks on the for-profit sector, but it’s a risk investors need to be cognizant of. There’s no reason to expect that ITT Educational Services, Inc. (NYSE:ESI) and much of the rest of the industry won’t be left back again.

The article 2 of Yesterday’s Big Disappointments originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey and The Motley Fool have no position in any of the stocks mentioned.

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