March 12, 2012 PSW Staff |
States and Canada. It offers various diploma programs such as associate's, bachelor's and master's degrees. The company's diploma curricula includes medical assisting, medical insurance billing and coding, massage therapy, dental assisting, pharmacy technician, medical administrative assisting, automotive and diesel technology, HVAC, surgical technology, plumbing, electrical, licensed practical nursing, electronics, and computer technology. Corinthian's degree curriculum includes business administration, criminal justice, medical assisting, registered nursing, accounting, paralegal, marketing, computer information technology, legal assisting, hospitality management, applied service management, film, and video. It also provides master's degree in business administration and criminal justice and an online learning alternative to students pursuing education exclusively online. As of June 30, 2011, Corinthian operated 122 colleges with 93,457 students in 26 states and the province of Ontario, Canada. The company was founded in 1995 and is based in Santa Ana, California. The entire for-profit education and training services industry has experienced some dramatic headwinds as it has tried to navigate through an unstable economy. A large majority of these company's revenues are derived from student loans, grants and other government aid. These colleges have been accused of doing a poor job preparing students for employment, and with inadequate preparation, these students are contributing to an unequal share of federal student loan defaults. Students at for-profit schools pay higher tuition than their public school counterparts, and the for-profit schools spend less of that money on actual instruction. This means that for-profit schools get all of the benefits of government aid and increased volume, but shift all of the risk to students and taxpayers. The department of Education drafted rules in 2010 that would essentially eliminate government aid for this type of school if a majority of its students default on student loans or their debt burden is excessive compared to his or her income. Thanks to an unprecedented lobbying effort, however, the final rules that came out in the middle of 2011 were less stringent, and the industry was granted three years to get its act together. Getting its act together, however, will require quite a bit of money and will likely eat away at profits, unless of course, a large amount of cash just sitting around can be found. Corinthian Colleges, which already has one of the better track records in the for-profit industry, has done just that. The company just sold five college buildings in northern California to a Real Estate Investment Trust for $40 million. The REIT is leasing them back to Corinthian who will continue to teach students. It also plans to shut down a few schools in the South after educating the remaining students (known as a teach-out). Meanwhile, Corinthian has been expanding offerings elsewhere, including its online only degree programs. During the last reported quarter, the rate of decline in new student enrollment improved significantly, and the company expects this important metric to turn positive during the current quarter due to be reported in May and the following fiscal year end quarter. Revenues improved slightly last quarter but thanks to some extreme cost cutting efforts, Gross Profits improved dramatically. After losing a ton of money early in fiscal 2011, the company has been earnings positive in four out of the last five quarters. Investors seem to like the company's strategy, as the stock has outperformed all of the publicly traded for-profits lately, including ITT Educational Services (ESI), DeVry (DV), Apollo (APOL) and Bridgepoint Education (BPI). All of these stocks have been heavily shorted for some time. As of February 29, about 15.3 million of COCO's 85 million shares outstanding were being shorted. This dropped from 17.2 million just two weeks prior, a much larger decline than any of the others have seen. With such a dramatic drop in short sellers in such a short period of time, a short squeeze may just be getting underway, and with a pretty significant pull back over the last week or so, now may be a great time to get on board for some quick profits. |
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