Devry’s Cheap, But Estimates are Falling

Devry (DV) continues to be on my radar, even as the entire for-profit Education sector is under pressure.

One-Year Chart

DV had profit growth of 36% last quarter, but I get the feeling the government pressure won’t really be felt till next year.

The one-year chart shows Estimates of 19% and 13% coming over the next two quarters. With that in mind DV seems like a good value for 10 times earnings.

Also, this stock is still trending down. Although Devry’s had a couple bounces higher this fall, the stock still keeps the downward trend intact.

Earnings Table

The earnings table tells a bearish story.

The biggest downer is quarterly estimates declined across the board. I don’t like that. Now profit growth in the single-digits is expected three and four quarters from now. With that kind of growth, only a 12 P/E could be considered fair. Note quarterly estimates have declined in each of the last two quarters, that’s a trend — that looks to continue. So single digit growth might be optimistic when its all said and done.

2012 and 2013 annual estimates also took a hit — with only 8% and 10% profit growth expected in those years, respectively.

Bottom Line

The bottom line is DV has to stay on the radar. With estimates falling and single-digit growth on the horizon, this stock isn’t timely at all.

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