Here I will be analyzing two educational companies. One based in North America and the other in China. I will compare the companies' balance sheets and income statements.
Corinthian Colleges (COCO) is one of the largest post-secondary education companies in North America. The company's program areas include health care, business, criminal justice, transportation technology and maintenance, construction trades and information technology.
On February 1, 2012 Corinthian Colleges reported financial results for the second quarter, ended December 31, 2011. The results for the quarter exceeded previous guidance ranges for earnings per share and were within previous guidance ranges for revenue and new student enrollment.
"As anticipated, the rate of decline in new student enrollment growth improved significantly in the quarter," Massimino said. "The improvement is the result of several factors, including a less challenging comparable from the second quarter last year, gradual stabilization in ground school new enrollments and continued strong growth at Everest University Online. In the last half of fiscal 2012, we expect new enrollments to be slightly positive.
To help offset recent declines in student population, over the past 18 months we have reduced annualized operating expenses by approximately $150 million," Massimino said. "We also continue to pursue several growth initiatives, such as introducing new program offerings, opening new campuses, and growing our exclusively online enrollments."
Comparing the second quarter of fiscal 2012 with the same quarter of the prior year:
The company expects revenues of $430 – $440 million for Q3 2012 and EPS of $0.15-0.17.
Noah Education Holdings (NED) is a leading provider of education services in China. The company's brands include Wentai Education, Little New Star and Yuanbo Education. Wentai Education operates and manages high-end kindergartens, primary and secondary schools; Little New Star provides English language training for children aged 3-12 in its directly owned and franchised training centers; Yuanbo Education operates premium kindergartens under the Qingan brand.
On November 18, 2011, the company announced first-quarter fiscal 2012 results.
Net revenue for the first quarter increased 73.8% to $5.4 million from the first quarter of fiscal 2011, driven mainly by the strong growth in existing Wentai and Little New Star (LNS) business and two months contribution from the newly acquired Yuanbo. Net income for the first quarter was $0.3 million.
As of September 30, 2011, the company had $2.15 cash per share. Real estate value is $0.51 per share. Cash plus real estate value per share is $2.66. For the three months ended September 30, 2011, the company generated $8.2 million in cash from operations.
Financial Outlook for Full Fiscal 2012 and for the Second Quarter of Fiscal 2012
Based on current estimates and market conditions, for the first quarter of fiscal 2012, Noah expects to generate net revenue in the range of $5.5 million to $5.8 million. For the full fiscal 2012, the company continues to expect to generate revenue between $22.7 million and $24.3 million representing a 55% to 66% year-over-year growth. The company is expected to be profitable in fiscal year 2012 following completion of ELP business sale in June 2011.
Noah is currently trading below net cash and is profitable. Corinthian Colleges is currently trading at more than 10 times its cash position and has $135.3 million in debt but is profitable. Corinthian Colleges has already reported results for the quarter ended December 31, 2011, but Noah is yet to report its. I recommend buying Noah at current prices and Corinthian Colleges at around $3 if we do get a pullback.