DeVry Inc. (DV) a world leader in providing educational services, registered decent fourth quarter 2011 earnings of $1.08 per share that climbed by 9% from 99 cents posted in the year-ago period. Earnings also exceeded the Zacks Consensus Estimate of $1.03 by 4.85%. For the fiscal year the earnings increased 21% to $4.68 per share. The fiscal results also surpassed the Zacks estimate of $4.63 per share.
Management ascribed the strong performance to the company’s commitment to academic quality and strong execution of diversification strategy.
Consolidated Revenue and Margins
DeVry’s quarterly net sales climbed 8% to $546.7 million compared with $506.7 million in the prior-year period. The fiscal 2011 earnings jumped 14% year over year to $2,182.4 million.
Operating cost and expenses climbed to $437.2 million compared with $406.1 million a year ago. For the full year, operating cost increased to $1,688.2 million compared with $1,504.3 million in the previous year.
As a result, operating income rose to $109.6 million in the quarter, compared with $100.6 million in the year ago period. For the fiscal year, operating income shot up to $494.2 million compared with $410.9 million reported in the previous year.
Enrollments for the summer at DeVry University went down 25.6% to 15,566 compared with 20,935 last year. This was due to employee distractions caused by the roll out of new processes related to the implementation of new regulations. Prolonged economic downturn and continued high unemployment also proved a deterrent to many students who refrained from enrolling in colleges.
In Ross University, enrolments increased 37.9 percent to 469, compared with 340 students last year. Total students rose 6.2 percent to 4,825 compared with 4,542 students in the same term last year. While new student enrolment increased 16.1 percent to 2,805, students at Chamberlain’s, the same declined 33.6 percent to 2,850 compared with 4,291 last year at Carrington Colleges Group.
Other Financial Updates
The company exited the year with cash and cash equivalents of $447.1 million at June 30, 2011, up from $307.7 million at June 30, 2010.
During the fourth quarter of fiscal 2011, DeVry repurchased 518,317 shares of its common stock at $54.39 per share. The company completed its fifth stock repurchase program of $50 million during the quarter.
Acquisition
The company announced the acquisition of the American University of the Caribbean (AUC). AUC is a leading international provider of medical degrees with a campus based in St. Maarten. The acquisition further positions DeVry as the leader in international medical education.
Our Take
We are encouraged as DeVry is a leading provider of post-secondary educational services in North America. Moreover, the company has a rich experience of working for more than 75 years in the education industry and enjoys the privilege of having reputed institutions like DeVry University and Ross University in its portfolio. The company is also taking initiatives to expand its revenue streams through strategic acquisitions.
However, risks relating to regulatory matters, vulnerability to seasonal fluctuations and high dependence on government aid programs are matters of concern.
Currently DeVry holds a Zacks #3 Rank. On a long-term basis, we maintain a Neutral rating on the stock with a short-term Hold rating.
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