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For-profit education stocks continue to show solid gains in the week following the Democrat...

For-profit education stocks continue to show solid gains in the week following the Democrat National Convention where government backing of public education was given a lifeline. The industry has been battling the current Department of Education over increasing disclosures on the likelihood that borrowers will be able to pay back loans, but a new administration could ratchet up the pressure even further. Advancers: CECO +9.5%, EDMC +10.9%, DV +5.5%, ESI +5.3%, APOL +3.1%.
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Comments (2)
  • Lookhere
    , contributor
    Comments (23) | Send Message
     
    After hours has it back at $3.50. Maybe every dog has its day :)
    11 Sep 2012, 04:24 PM Reply Like
  • Onepaw
    , contributor
    Comments (32) | Send Message
     
    Seeking Alpha is forgetting of the enormous effort that this lobby has made in wooing the right wing. Given that there is little value to an EDMC education, the astronomical dropout rates, similar disproportionately high unemployment rates among graduates, record high default rates, and the fact that EDMC realizes 90% of its revenue from Title IV loans would hardly make it a novel attraction to any elected government. The 12 Billion USD lawsuit launched by the Department of Justice is only representative of the very long list of shareholder lawsuits, class action lawsuits, and an exhaustive list of investigations. Additional whistleblower lawsuits are being filed in GA, FL, TX, IN and AZ. The mere settlement of any one of these lawsuits will likely clean out any cash the company may have on hand.

     

    Employees and students alike have taken aim at the company such that is enjoys little goodwill value in any brand. The Pittsburgh City Paper, Huffington Post, Truth Out, Bloomberg, and the Trib Total Media have never tired of exposing the extravagances of the officers, the huge personal donations they have made to the Romney campaign and a seemingly endless line up of former students and employees who are willing to expose grotesque internal grievances. The question becomes, "Is this an Education or a Sales Organization?"The issue of unemployment existed before the disparity hit our economy. Employers are wise to the caliber of graduate that has these “degrees”. Only a limited number of moderately competitive schools will accept credits for transfer. The brands are no longer a choice for preparation for competitive higher education.

     

    Smoothing the way for student loans would hardly affect the value of this company if in fact it has deceived students, the regulatory bodies, lenders, and possibly the accreditation agencies. While there are for profit education stocks out there that may be worth a second look, this should not be included among them. While there is no saying that any stock cannot be resurrected, a responsible investor will certainly want to wait until much of this litigation is resolved before considering what may be left, to be of any value. Among other issues to yet be explored are the criminal investigations of executives and officers.

     

    This appears to be a pleasant relief at the moment. However, the private school industry (for profit and not) has yet to show that it can withstand the scrutiny that would return it to favor and that it can, indeed, provide education. To date it has primary advanced by enrolling students who could not otherwise enter higher education. At some point either party will need to justify investment in a student body that lacks the basic skills necessary to stay enrolled in even these cushy programs.
    11 Sep 2012, 06:30 PM Reply Like
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