DeVry Goes From Value to Value Trap (DV)

DeVry Inc. (NYSE: DV) is in a position which just feels like a no-win situation in for-profit education.  Shares are down nearly 8% at $36.50 and we have already passed a full day’s trading volume with over 1 million shares traded in the first 90 minutes of the trading session.

The company had a large write-down in its fourth quarter in the report delivered on Thursday evening.  The impairment charge was nearly $56 million at the Carrington Colleges Group unit.  Earnings came in at a mere $0.13 EPS and Thomson Reuters was calling for about $1.00 in its reported per share earnings.

The drop to $36.50 compares to a 52-week trading range of $32.73 to $66.85.  The trailing P/E ratio of 8 now may look enticing as a value stock on the surface, but when you see earnings compression like this it is a classic case where a value stock turns into a value trap. The pressure on the for-profit education sector is just not yet coming out from being under fire.