DeVry at Head of the Class This High-Tech Educator Also on Cutting Edge as Investment
Caruthers, Chrystal, Daily Herald (Arlington Heights, IL)
Byline: Chrystal Caruthers Daily Herald Business Writer
What do you want to be when you turn 30?
If you, like the steady stream of young adults entering DeVry Institute of Technology campuses around the country, are rethinking your career choice and redirecting your sights to a job in the hottest industry in the world, then the answer would be a computer engineer, programmer or some type of high-technology insider.
While companies throughout the country scout eligible computer gurus, DeVry is cranking them out by the thousands, and still that's not enough.
According to the U.S. Department of Labor, more than 350,000 information technology jobs are empty, and the pool of available labor is too shallow to fill even 10 percent of those vacancies.
That's why Oakbrook Terrace-based DeVry's coffers are steadily growing.
Net income increased 27 percent to $30.7 million, or 44 cents per share, for the fiscal year ended June 30. At the same time, revenue increased 14.6 percent to $353.5 million.
Moreover, DeVry's stock has outperformed the Standard & Poor's stock market index threefold. Year-to-date, DeVry's stock has increased 32.5 percent while the S&P has registered a 12 percent gain.
The market has responded favorably to DeVry for one simple reason: "They have never missed (earnings estimates) a quarter since going public," said Matt Stefan, a vice president with ABN Amro.
DeVry Inc. is the owner and operator of not only DeVry Institute, but the Keller Graduate School of Management, Becker CPA Review, and Corporate Educational Services. The company has managed to defy the odds when it comes to market performance. Though it's not the hottest educational stock - many would say that title is reserved for ITT Educational Services - it has managed to post at least 20 percent annual growth for the past seven years that it been public.
"It has an enviable growth record," Stefan said. "DeVry is one of those company's you buy in your IRA and forget about it for the next 10 or 20 years."
In a nutshell, analysts love DeVry. Ten of the 12 analysts tracking the company's performance have a "buy" rating on the stock. The other two say "hold."
Its performance is predictable - it grows by attracting new students, expanding to new markets and raising tuition. In turn, its earnings increase.
"People like to go with predictability. That's why they pay a premium to own the stock," Stefan said.
DeVry is trading at about $20 a share, or "43 times calendar year 1998 earnings," Stefan said.
Salomon Smith Barney analyst Gerald Odening has a $24 price target on DeVry, and he has raised his estimate of the company's growth rate to 23 percent from 19 percent.
"Students pay up front for services delivered later. It's a marvelous cash-flow business," Odening said.
Speaking of cash, the company entered the year with nearly $39 million of cash and cash equivalents on hand, according to the company's annual report.
Plans are to add one new DeVry Institute and five or six new Keller Graduate Schools of Management per year during the next three to five years. …