DeVry, Inc. (NYSE: DV): Stock of the Day
Judith Martin, The Investment U Research Team
Last month’s figures from the U.S. Bureau of Labor peg unemployment at 9.7% across the country, but some of us are sweating it more than others.
The good news is that all demographics can increase their chances of employment (and their wages) by continuing their education.
While one in seven high school dropouts is unable to find work, the unemployment rate among those with at least a bachelor’s degree is only 4.8%. Not to mention that the salaries of those with a bachelor’s degree were 130% higher in 2008.
So it’s no wonder that a record-breaking number of adults are going back to school – many of these still holding full-time jobs. And no publicly traded company is poised to profit from this trend as much as DeVry (NYSE: DV).
Raking in the Tuition Dollars
With flexible scheduling and extensive online degree programs, DeVry has secured its position as the premier University for adult continuing education.
In fact, DeVry expects that at least 80% of its student population this year will be over age 25, more than double the national average.
DeVry’s dedication to this growing student demographic has paid off.
Considering the University’s past growth, this quarter’s 25% increase in earnings per share is not unusual, nor is the 18.6% leap in net income over just three months.
And these massive gains are just the beginning.
President Obama has made it clear that supporting adult education will be of primary importance during his presidency.
This year, the Obama administration unveiled the American Opportunity Credit, an annual tax credit of $2,500 available for students and their parents for up to four years.
Over the past year, the undergraduate population at DeVry has increased by 18.8%, before the credit was made available. This year, the American Opportunity Credit should boost DeVry’s enrollments right through the roof.
There’s No Such Thing as “Too Much Growth”
As if that wasn’t enough, DeVry completed a Brazilian acquisition earlier this year, gaining an 82.3% stake in publicly traded Fanor.
This was a great play for DeVry. Not only is Fanor one of the country’s leading universities, but while the US stock market continues to struggle, the Brazilian market has already risen 50% since January 2009.
This is great, but it sounds like DeVry is racking up a considerable debt…
Not at all. In fact, this quarter alone, DeVry managed to decrease its long-term debt by $20 million. And while other schools suffer as the average college endowment declines almost 30%, DeVry kept the banks busy this spring with a 45% increase in cash reserves.
Even with the recent surge, DeVry hasn’t tapped its enormous growth potential. It’s targeted marketing to adults combined with a tight reign on administrative expenses gives it a strong position to emerge from this recession as one of the leaders in for profit education.
And as more students pile into DeVry’s efficient web-based courses, its bottom line should only get better. Investors should take special note to add this to their must-watch lists.
Good investing,
Judith Martin
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