QUOTE AND NEWS
The Hindu Business Line  Nov 6  Comment 
Bio-fuels should be genuinely sustainable and cost-effective for the Indian Railways to use such fuels, said DV Sadananda Gowda, Minister of Railways, at an event organised by Bio-Diesel As...
TheStreet.com  Oct 30  Comment 
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. aTheStreet Ratings quantitative algorithm...
The Hindu Business Line  Oct 26  Comment 
The Union Railway Minister, DV Sadananda Gowda, has said that the increase in his assets is due to the loans he had taken and the rental advances against that loan. This follows ADR’s (A...
Benzinga  Oct 24  Comment 
In a report published Friday, Morgan Stanley analyst Suzanne E. Stein reiterated an Equal-Weight rating on DeVry Education Group (NYSE: DV), and named a $40.00 price target. In the report, Morgan Stanley noted, “DV beat on EPS but more...
newratings.com  Oct 23  Comment 
WASHINGTON (dpa-AFX) - DeVry Education Group (DV) reported third-quarter income from continuing operations, net of income taxes, to company of $20.44 million, compared to $8.20 million, prior year. Earnings per share from continuing operations to...
Benzinga  Oct 22  Comment 
DeVry University recently announced the appointment of Ryan Sagers as its Philadelphia metro president, overseeing operations, academics, admissions and career advising at the university's King of Prussia, Center City and Fort Washington...
Market Intelligence Center  Oct 17  Comment 
After closing Thursday at $43.77, DeVry Inc. (DV) presents an attractive opportunity to get a 9.97% return in just 126 days, which is an annualized return of 28.88% (for comparison purposes only). To enter this trade, sell one Feb. '15 $45.00 call...
Market Intelligence Center  Oct 3  Comment 
After closing Thursday at $43.86, DeVry Inc. (DV) presents an attractive opportunity to get a 10.13% return in just 140 days, which is an annualized return of 26.42% (for comparison purposes only). To enter this trade, sell one Feb. '15 $45.00...




 

DeVry (NYSE: DV) is the third-largest for-profit university by revenue. The company offers undergraduate and graduate degrees in technology, business and healthcare technology, management, medicine, veterinary medicine, and nursing. More than 130,000 students[1] are enrolled in DeVry's various programs and tuition accounts for most of the company's revenue.

One of DeVry's fastest growing divisions is its Medical and Healthcare segment. Through Ross University Schools of Medicine and Veterinary Medicine and Chamberlain College of Nursing, the company offers nursing, M.D., and veterinary degrees. The US Department of Labor predicts that 587,00 new jobs will be created for registered nurses through 2016 and the Association of American Medical Colleges expects the demand for physician education to grow by 30% over the next decade. In response to this overwhelming demand DeVry has plans to open Chamberlain College campuses every year.

Historically, enrollment at for-profit educational institutions has increased during economic downturns as poorer job prospects cause prospective students to view continuing education more favorably.

Company Overview

The company is the holding company for DeVry University (including the Keller Graduate School of Management), Ross University, Chamberlain College of Nursing, Becker Professional Review, and Advanced Academics. DeVry University offers associate, bachelor's and master's degree programs in technology, healthcare technology, business, and management. Ross University offers doctoral degree programs through its schools of Medicine and Veterinary Medicine while Chamberlain College of Nursing offers associate and bachelor's degree programs in nursing. The Professional and Training segment includes Becker Professional CPA Review and Stalla Review for the CFA Exams, provides professional education and test preparation services to candidates of the Certified Public Accountant (CPA) and Chartered Financial Analyst (CFA) professional certification examinations.

Business Segments[2]

  • DeVry University (78% of revenue) - DeVry University offers undergraduate and graduate degree programs in technology, business and healthcare technology, and graduate degrees through the Keller Graduate School of Management.
  • Professional and Training (7% of revenue) - More than 50,000 students are enrolled in review classes, with CD-ROM and online review courses accounting for nearly 55% of all enrollments. Advanced Academics provides online secondary education to school districts throughout the U.S. Students attending the CPA/CFA review courses are not eligible for federal financial aid but many employers pay tuition for their employees in the these programs.
  • Medical and Healthcare (15% of revenue) - The Medical and Healthcare segment consists of the Ross University School of Medicine in Dominica, Ross University School of Veterinary Medicine in St. Kitts/Nevis, and Chamberlain College of Nursing in Missouri and Ohio. These institutions serve nearly 4,500 students and present one of DeVry's greatest opportunities for growth with demand for medical education expected to increase by 30% in the next decade.

Business Growth

FY 2009 (ended June 30, 2009)[3]

  • Total revenue increased 34% to $1.4 billion. The company attributes the gain to an increase in the number of students, which lead to an increase in tuition revenue.
  • Net income increased 32% to $166 million.

Trends and Forces

Job Trends and DeVry’s Medical and Professional Training Segments

According to the US Department of Labor, the employment of registered nurses through 2016 is expected to create 587,000 new jobs representing growth of 23%. Some employers in certain parts of the country are having difficulty attracting registered nurses, while enrollments in registered nursing programs are increasing rapidly over the past few years. Applicants are reported to be turned away due to the shortage of nursing faculty. DeVry’s is opening another Chamberlain college of nursing facility in Ohio, and the company also filed applications to open up Chamberlain facilities in Illinois and Arizona to add to their existing location in Missouri and Ohio. The company stated during the 2nd quarter earnings call that their goal was to open up one new Chamberlain facility per year.

Within the accounting and financial industries, the US Department of Labor reports 226,000 new jobs in accounting, and 147,000 new jobs for financial analyst/advisers through 2016. This represents job growth rates of approximately 18% and 37% respectively. Demand for CPA and CFA designations will likely increase as these specializations help respective accountants and financial adviser advance their careers and compensation. DeVry’s Becker CPA and Stalla CFA review programs have benefited from these trends showing over 20% top line revenue growth rates for the professional/training segments. The company has made efforts to align these programs with specific accounting firms and societies inside the US and internationally, in the hopes to increase the channel/demand for these review programs.

Increasing Demand Drives Up Enrollment

More than 93% of DeVry revenue comes from tuition. The average age of the University of Phoenix student is in his between 25 and 39 years old.[1] DeVry focuses on marketing itself to the non-traditional higher education population of students older than 24 years old. The U.S. Department of Education estimates that the post-secondary education market is worth at least $370 billion and estimates that nearly 40% of all students enrolled in post-secondary education programs are older than 24. Over the next six years, the percentage of 18-24 year old students will increase by 19%, and the number of non-traditional students should grow at a similar rate. Because such a large percentage of Apollo's revenue comes from tuition, the company's continued success will depend on its ability to recruit and enroll ever-increasing numbers of students.[4]

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. Apollo Group has been no exception from this trend. The global economic slowdown has increased their number of students and thus raised revenues. The number of students at the University of Phoenix increased by 10,000 in 2009.[1] As a result, the company's net revenue grew by 34% in 2009.[3]

Competition

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:[4]

  • 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.

ITT Educational Services (ESI) operates 124 campuses in 38 states serving approximately 80,000 students.

References

  1. 1.0 1.1 1.2 DV 2009 10-K "Enrollment Trends" pg. 7-8
  2. DV 2009 10-K pg. 4-13
  3. 3.0 3.1 DV 2009 10-K "Consolidated Statements of Income" pg. 73
  4. 4.0 4.1 APOL 2009 10-K "Industry Background" pg. 8-9
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