DeVry (DV) – Bearish
|DeVry Inc. (NYSE: DV) is among the bigger members of the embattled for-profit education industry, which is under heavy scrutiny for its marketing practices and job-placement performance. If you’re going to receive the lion’s share of your revenue via government grants and aid, you had better keep your nose clean, especially these days. Look at rival Apollo Group, Inc. (NASDAQ: APOL), which got creamed after its earnings report last week.DV also took a hit after Apollo reported, to the tune of around 17%, some of which it’s recovered over the past week. But now it must step into the earnings confessional on Tuesday after the close. The company hasn’t missed an estimate in two years, and expectations this quarter are far below the actual growth logged the past few quarters. But it’s not about what DV did last quarter. It’s all about what will happen next. After all, Apollo beat its estimate.
The other problem for DV is that despite beating estimates, the stock has not necessarily followed suit. One-week drops of more than 14% after the past two reports should make you nervous … or excited if you buy DV put options.
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