Is it worth investing in education companies?
Career College Central Summary:
Traditionally, higher education is a non-for-profit enterprise, be it public or private. But in the mid-1990s there was a surge of for-profit education companies, many of which have come under great scrutiny for everything from their recruiting practices to student loan default rates.
That got me wondering: If there’s a reasonable rate of return investing in your own education, what’s the ROI when you invest in others? Shares in Corinthian Colleges are traded on the Nasdaq under the symbol COCO. Until three years ago, shares sold for about $25, but fell off the ledge in 2011, dropping to less than $1.50. The price fell sharply again a few weeks ago when Corinthian told shareholders that bankruptcy was imminent. On Tuesday afternoon, shares were trading for 23 cents.
The results are also disappointing for ITT Educational Services (ESI), American Public Education (APEI), Education Management Corp. (EDMC), Bridgepoint Education (BPI), and Lincoln Educational Services (LINC), none of which are setting portfolios afire.
Apollo Education Group (APOL), which owns the University of Phoenix, has rebounded over the past year from about $17 per share to $30 or so, but even that is just one-third of the value Apollo had five years ago. Strayer Education (STRA), which had been performing well, reported a 50-percent earnings decline and a 10-percent enrollment drop. Although the stock has bounced back from $33 in January to $51, that’s an 80-percent decline from the $250 share price the company had as recently as 2011.
The lone semi-bright spot for investors has been DeVry, which has been on a steady climb since it bottomed out at $18.35 in June 2012 and was trading Tuesday at $43. Like Strayer, that’s one-third off DeVry’s $65.20 pinnacle in 2010.
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