SeekingAlpha  1 hr ago  Comment 
By Shock Exchange: In my previous article I questioned whether school was out for ITT Educational Services (NYSE:ESI). The company had just received a Wells Notice implying that the SEC could seek a cease-and-desist order and/or fines against the...
Benzinga  Oct 16  Comment 
iBio (NYSE: IBIO) shares jumped 40.29% to $1.95 after the company issued response to its role in emergency response to Ebola. ITT Educational Services (NYSE: ESI) shares rose 25.94% to $5.00. ITT Educational Services is expected to conduct a...
SeekingAlpha  Oct 13  Comment 
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DailyFinance  Sep 30  Comment 
Electro Scientific Industries, Inc. (NASDAQ:ESIO), an innovator of laser-based manufacturing solutions for the microtechnology industry, today announced the µFlexTM Series multi-axis precision laser micromachining platform,...
SeekingAlpha  Sep 22  Comment 
By Shock Exchange: Corinthian Colleges (NASDAQ:COCO), once a bellwether among for-profit colleges, has fallen on hard times. The for-profit education industry has been criticized for recruiting students most-likely to qualify for government-backed...
TheStreet.com  Sep 19  Comment 
NEW YORK (TheStreet) -- Shares of ITT Educational Services Inc. are falling by 37.25% to $4.80 on very heavy volume in mid-afternoon trading on Friday. The for-profit post-secondary educator said it received a notice that the SEC may take...
Wall Street Journal  Sep 19  Comment 
Troubles in the nation's for-profit college industry accelerated on Friday as ITT Educational Services Inc. disclosed that two federal agencies have placed the struggling education company in their cross hairs.
Benzinga  Sep 19  Comment 
ITT Educational Services Inc (NYSE: ESI) -39% - The company received a Well notice from the SEC saying that it planned to bring an enforcement action against the for-profit university. North Atlantic Drilling Ltd. (NYSE: NADL) -11% - Momentum...
StreetInsider.com  Sep 19  Comment 
(Updated - September 19, 2014 9:31 AM EDT) Concur Technologies, Inc. (Nasdaq: CNQR) 18.6% HIGHER; SAP SE (NYSE: SAP) has entered into an agreement to acquire Concur Technologies, Inc. (Nasdaq: CNQR). The per-share purchase price of US$129...
Wall Street Journal  Sep 19  Comment 
U.S. regulators warned ITT Educational Services that the struggling for-profit educator faces potential civil enforcement action, while the company's finances were placed under more scrutiny.


ITT Educational Services (ESI) is the fourth largest for-profit university in the U.S., offering 35 degree programs to approximately 80,000 students, both online and at 124 campuses and 5 learning sites in 38 states. The company's revenue comes from tuition charges.[1] The company earned $1.3 billion in revenue and $300 million in net income in 2009.[2]

ITT Educational Services has traditionally focused on providing technology-related associate degree programs, but has expanded its offering to include an increased number of degree programs outside of technology in addition to a greater number of bachelor's degrees. Bachelors programs generate more revenue than Associate's degree programs because they are often 4-year programs versus 2-year Associate programs, and Bachelor's programs have greater tuition costs. To provide these new services, ITT has opened many new smaller branch campuses and learning sites.

Historically, enrollment at for profit educational institutions has increased during economic downturns as poorer job prospects cause prospective students to view continuing eduction more favorably. The global economic downturn has increased student enrollment and as a result, the company's net revenue increased by 30% in 2009.[2]

Company Overview

The ITT Technical Institutes offers 35 degree programs in fields in the following schools of study:[3]

  • Business: includes the fields accounting, business administration, financial services, marketing and advertising, and manufacturing
  • Drafting and Design: includes the fields computer-aided drafting, electrical and electronics drafting, mechanical drafting, architectural and construction drafting, civil drafting, interior design, landscape architecture, and multimedia communications
  • Electronics Technology: includes the fields electronics product design and fabrication, communications, computer technology, industrial electronics, instrumentation, and telecommunications
  • Criminal Justice: includes the fields corrections, security and policing, investigations, and cyber security
  • Information Technology: includes the fields network administration, technical support, network technology, and systems technology
  • Health Sciences: includes the fields nursing and health information technology

Student Demographics[4]


  • 19 or less - 8%
  • 20 through 24 - 34%
  • 25 through 30 - 28%
  • 31 or over - 30%


  • Male - 75%
  • Female - 25%


  • Caucasian - 49%
  • Other - 51%

Business Growth

FY 2009 (ended December 31, 2009)[2]

  • Net revenue increased 30% to $1.3 billion. The company attributes the growth to a 27.1% increase in student enrollment and a 5% increase in tuition rates.
  • Net income increased 49% to $300 million.

Trends and Forces

Capitalizing on Increased Demand for Education During Global Economic Slowdown

Historically, enrollment at for profit educational institutions has increased during economic downturns as poorer job prospects cause prospective students to view continuing eduction more favorably. People of all ages are going back to school to get a better job and increase their job prospects -- 30% of the university's students are over the age of 31, a 6% increase from the previous year.[4] ITT has been no exception from this trend. The global economic slowdown has increased their number of students and thus raised revenues. As a result, the company's net revenue grew by 30% in 2009.[2]

The U.S. Department of Education estimates that the post-secondary education market is worth at least $370 billion. The Department of Education estimates that nearly 40% of all students enrolled in post-secondary education programs are older than 24; 80% of Career Education's enrolled students are 'non-traditional' and older than 21. Over the next six years, the percentage of 18-24 year old students will increase by 16%, and the number of non-traditional students should grow at a similar rate.

Government Regulation and Financial Aid Policies Determine ITT's Fiscal Success

The post-secondary education market is highly regulated for any educational institutions that receive funding from the government; in ITT's case, government funding is in the form of financial aid programs that subsidize qualified students' education costs. Because 70% of ITT's annual revenue comes from Federal Education Financial Aid Programs, any significant change in policy for the various financial aid programs will affect ITT's revenue.[5]


The post-secondary education market is extremely competitive and not dominated by any single player. The United States has approximately 6,550 post-secondary education institutions:[6]

  • 2,730 private, for-profit schools
  • 2,000 public, non-profit schools
  • 1,820 private, non-profit schools

In addition to this extreme market fragmentation, the extensive accreditation process acts as a significant barrier to entry for new companies.

Of the other private, for-profit schools that target non-traditional students, Apollo Group (APOL) , DeVry University (DV), and ITT Educational Services (ESI) pose the greatest competition to Career Education.

Career Education (CECO) is a global for-profit university that offers associate, master's, bachelor's and doctoral degree programs in vocational areas such as business, communications and IT. The company had an enrollment of 116,000 students on 90 campuses in the the US, France, Italy, and UK.

Apollo Group (APOL) operates the University of Phoenix, the largest private, for-profit postsecondary education institute. They serve more than 355,800 enrolled students, at 102 campuses and 157 learning centers in forty states.

DeVry (DV) served approximately 130,000 students through its four subsidiary institutions - DeVry University, Ross University, Chamberlain College of Nursing, and Becker Professional Review. DeVry University is an undergraduate institution with more than 80 locations and the Keller Graduate School of Management. Ross University operates the Ross University School of Medicine and the Ross University School of Veterinary Medicine in Dominica.


  1. ESI 2009 10-K "Overview" pg.1
  2. 2.0 2.1 2.2 2.3 ESI 2009 10-K "Selected Financial Data" pg. 32
  3. ESI 2009 10-K "Programs of Study" pg. 3-5
  4. 4.0 4.1 ESI 2009 10-K "Student Admission and Retention" pg. 5-6
  5. ESI 2009 10-K "Federal and Other Financial Aid Programs" pg. 8-10
  6. CECO 2009 10-K "Industry Background and Competition" pg. 2-3
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