Should We Follow Steven Cohen Into ITT Education Services, Inc. (ESI)?

For the full year 2013, Apollo expected to generate annual revenue of $3.65 to $3.75 billion, with operating income in the range of $500 to $550 million, excluding special items and other charges. In March 2013, the company’s board authorized a share repurchase program of up to $250 million, with no expiration date. Apollo is trading around $21.30 per share, with the total market cap of $2.4 billion. The market values Apollo cheaper than ITT, at 9.6 times its forward earnings.

DeVry Inc. (DV), the global leading career-oriented educational services, focuses its course offering on the business field. For the full year 2013, DeVry expected to reduce its operating costs by 1%-2%, because of huge cost management at DeVry University and Carrington Colleges. The company estimated around $100 million in addition cost savings in those two institutions, higher than the previous estimate of $80 million. DeVry seems to have the highest valuation. At $30.10 per share, DeVry is worth $1.9 billion. The market values DeVry at 12.1 times its forward earnings.

Income investors might like DeVry the most, as among the three companies, it is the only company that pays dividends. At its current trading price, its dividend yield is 1.1%. Interestingly, the dividend payment policy of DeVry is quite conservative, with only 14% payout ratio.

My Foolish take

Jim Chanos, the famous short seller, has said that the for-profit education model was broken because it depends so much on government funding. Thus, it is not a good industry for investors to be in. Investors need to dig deeper into each companies to find out the suitable stock for themselves. Personally, I like DeVry the most with its dividend payment and low payout ratio.

The article Should We Follow Steven Cohen Into ITT Education Services? originally appeared on Fool.com.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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