Chuck Carnevale's  Instablog

Expanding Minds an Expanding Business

Thanks to the recession, more and more people nationwide are making the “smarter” move. They are going back to school, that is, in order to increase their value and attractiveness in a distressed workplace environment. This is proving to be a boom for ITT Educational Services, Inc. (ESI), one of the leading post secondary education providers in the country. ITT Educational Services, Inc. (ESI) is headquartered in Carmel, Indiana.

Traditionally, ITT Educational Services, Inc. (ESI) provided technology-oriented degree programs to help students develop skills and knowledge they can use to win jobs in numerous fields. More recently, they have expanded their offerings to include new associate and bachelor degree programs as part of their growth strategy. In addition to diversifying their curriculums, they are also expanding geographically.

United Technologies (UTX) is a diversified global provider of high-technology products and services for building systems and aircraft. From an operating perspective, this stalwart blue-chip has weathered the recession better than other well-known peers. Although earnings and market price sagged in 2008, both are recovering quickly as the economy and stock market improves.

When viewed from the perspective of our Fundamentals-at-a-glance earnings and price correlated research tool, United Technologies’ (UTX) operating excellence versus its peers’ is clearly evident. Figure 1 shows United Technologies’ (UTX) stock price since 1996 overlaid on their earnings growth. As you can see, stock price tracked earnings very closely over the years. When the price (black line) rose above the earnings line (green line with white triangles) it always returned to the earnings justified price and vice-versa.

Fig. 1. UTX 15yr EPS Growth and Stock Price Correlation