Career Education Over-Bought On Apollo EPS Report Today

Oct.24.13 | About: Career Education (CECO)

Apollo Group (NASDAQ:APOL) reported earnings today and beat and EPS estimates. Nothing in their report seemed to be based on sector-wide trends. But that did not stop sector-wide buying. Specifically APOL has managed to control costs better than other companies in this sector, and this is the basis for their EPS win.

Each company in the sector has unique challenges and niches, APOL is a more focused competitor in the critical online space. The gains come at the expense of competitors who are struggling to cope financially with the sector-wide decline in enrollments.

Specifically, Career Education (NASDAQ:CECO) jumped 15.09%, probably based on algorithms comparing similar companies in the sector and starting a purchasing trend that was self sustaining, volume was 3 times average today, and the stock price is up to levels not seen since their last earnings report. Since the last earnings report a major stockholder (Blum Capital) has been selling off their position and there has not been any positive sector-wide news to support today's level of purchasing.

CECO has one domestic profitable business unit, Colorado Technical University, and one breaking even business unit, American Intercontinental University, and a plethora of unprofitable schools in the Health, Culinary, and Arts fields.

CECO has struggled to cut costs at a pace that is equal to the rate of decline in their enrollments. CECO seems to have missed their forecasts on enrollment declines for 2014.

CECO reports Q3 2013 earnings Nov 6 with a conference call on Nov 7. It seems unlikely that CECO's EPS will exceed forecasts.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.