ITT Educational Services Inc. (ESI, Financial) filed Annual Report for the period ended 2011-12-31.
Itt Educational has a market cap of $2.01 billion; its shares were traded at around $74.11 with a P/E ratio of 6.8 and P/S ratio of 1.3. Itt Educational had an annual average earning growth of 34.1% over the past 10 years. GuruFocus rated Itt Educational the business predictability rank of 4.5-star.
Student services and administrative expenses increased to 29.3% of revenue in the year ended December 31, 2011 compared to 27.9% of revenue in the year ended December 31, 2010. The principal causes of this increase were the decline in revenue and an increase in media advertising expenses, which were substantially offset by a decrease in bad debt expense. Bad debt expense as a percentage of revenue decreased to 4.1% in the year ended December 31, 2011 compared to 5.4% in the year ended December 31, 2010. The primary factor that contributed to the decrease in bad debt expense as a percentage of revenue was a decrease in the amount of internal student financing that we provided to our students in the year ended December 31, 2011 compared to the year ended December 31, 2010. The decrease in the amount of internal student financing was primarily due to the amount of institutional scholarships and other awards and the private education loan programs available to our students in 2011. We believe that our bad debt expense as a percentage of revenue will likely increase in the fiscal year ending December 31, 2012, primarily due to an increase in the amount of internal student financing that we may provide to our students in 2012 compared to 2011 as a result of the expiration in 2011 of the two private education loan programs that provided the vast majority of private education loans to our students in 2011.
Operating income decreased $106.5 million, or 17.4%, to $507.1 million in the year ended December 31, 2011 compared to $613.5 million in the year ended December 31, 2010 as a result of the impact of the factors discussed above in connection with revenue, cost of educational services and student services and administrative expenses. Our operating margin decreased to 33.8% in the year ended December 31, 2011 compared to 38.4% in the year ended December 31, 2010, primarily due to the impact of the factors discussed above. We believe that our operating margin in 2012 will decline compared to 2011, primarily due to lower total student enrollment in 2012 compared to 2011.
Student services and administrative expenses decreased to 27.9% of revenue in the year ended December 31, 2010 compared to 28.8% of revenue in the year ended December 31, 2009. The primary causes of this decrease were compensation costs and media advertising costs increasing at a lower rate than the increase in revenue. Bad debt expense as a percentage of revenue decreased to 5.4% in the year ended December 31, 2010 compared to 6.2% in the year ended December 31, 2009, primarily because the amount of internal student financing that we provided to our students increased at a lower rate than the increase in student enrollment due to the private education loan programs available to our students in 2010.
Operating income increased $124.8 million, or 25.5%, to $613.5 million in the year ended December 31, 2010 compared to $488.8 million in the year ended December 31, 2009 as a result of the impact of the factors discussed above in connection with revenue, cost of educational services and student services and administrative expenses. Our operating margin increased to 38.4% in the year ended December 31, 2010 compared to 37.1% in the year ended December 31, 2009, as a result of the impact of the factors discussed above.
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Itt Educational has a market cap of $2.01 billion; its shares were traded at around $74.11 with a P/E ratio of 6.8 and P/S ratio of 1.3. Itt Educational had an annual average earning growth of 34.1% over the past 10 years. GuruFocus rated Itt Educational the business predictability rank of 4.5-star.
Highlight of Business Operations:
Cost of educational services as a percentage of revenue increased 320 basis points to 36.9% in the year ended December 31, 2011 compared to 33.7% in the year ended December 31, 2010. The primary factors that contributed to this increase included, in order of significance:Student services and administrative expenses increased to 29.3% of revenue in the year ended December 31, 2011 compared to 27.9% of revenue in the year ended December 31, 2010. The principal causes of this increase were the decline in revenue and an increase in media advertising expenses, which were substantially offset by a decrease in bad debt expense. Bad debt expense as a percentage of revenue decreased to 4.1% in the year ended December 31, 2011 compared to 5.4% in the year ended December 31, 2010. The primary factor that contributed to the decrease in bad debt expense as a percentage of revenue was a decrease in the amount of internal student financing that we provided to our students in the year ended December 31, 2011 compared to the year ended December 31, 2010. The decrease in the amount of internal student financing was primarily due to the amount of institutional scholarships and other awards and the private education loan programs available to our students in 2011. We believe that our bad debt expense as a percentage of revenue will likely increase in the fiscal year ending December 31, 2012, primarily due to an increase in the amount of internal student financing that we may provide to our students in 2012 compared to 2011 as a result of the expiration in 2011 of the two private education loan programs that provided the vast majority of private education loans to our students in 2011.
Operating income decreased $106.5 million, or 17.4%, to $507.1 million in the year ended December 31, 2011 compared to $613.5 million in the year ended December 31, 2010 as a result of the impact of the factors discussed above in connection with revenue, cost of educational services and student services and administrative expenses. Our operating margin decreased to 33.8% in the year ended December 31, 2011 compared to 38.4% in the year ended December 31, 2010, primarily due to the impact of the factors discussed above. We believe that our operating margin in 2012 will decline compared to 2011, primarily due to lower total student enrollment in 2012 compared to 2011.
Student services and administrative expenses decreased to 27.9% of revenue in the year ended December 31, 2010 compared to 28.8% of revenue in the year ended December 31, 2009. The primary causes of this decrease were compensation costs and media advertising costs increasing at a lower rate than the increase in revenue. Bad debt expense as a percentage of revenue decreased to 5.4% in the year ended December 31, 2010 compared to 6.2% in the year ended December 31, 2009, primarily because the amount of internal student financing that we provided to our students increased at a lower rate than the increase in student enrollment due to the private education loan programs available to our students in 2010.
Operating income increased $124.8 million, or 25.5%, to $613.5 million in the year ended December 31, 2010 compared to $488.8 million in the year ended December 31, 2009 as a result of the impact of the factors discussed above in connection with revenue, cost of educational services and student services and administrative expenses. Our operating margin increased to 38.4% in the year ended December 31, 2010 compared to 37.1% in the year ended December 31, 2009, as a result of the impact of the factors discussed above.
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