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CECO Revenue Down, Blum Cuts

May 11, 2013 | About:
Sally Jones

Sally Jones

49 followers
According to the GuruFocus Real Time Picks, Richard Blum, San Francisco-based Blum Capital Partners, cut back his stake in Career Education Corporation’s (CECO) for the ninth time this year. Guru Blum reduced his position with the troubled education and training services company by 7.36%, selling in the price range of $2.60 per share, as of May 10, 2013. Blum had started the year with over 12.4 million CECO shares, but after his latest sell, he holds 9,211,795 shares or 13.72% of shares outstanding. This latest trade impacts Blum’s portfolio for a negative 0.31%. CECO’s current price is $2.60, with a 0% change from average.

With a market cap of $170.3 million, Career Education Corporation has a P/B ratio 0.29, and a P/S of 0.12.

Last week Career Education Corporation reported total revenue of $340.5 million, and a net loss of $15.2 million, or -$0.23 per diluted share, for the first quarter of 2013 compared to total revenue of $431.4 million and net income of $52.1 million, or $0.78 per diluted share, for the first quarter of 2012. First quarter student enrollment, at 75,000, is also down 21% compared to same quarter last year with 95,400 students.

1368301623247.pngCECO data by GuruFocus.com

Mired in problems, some related to a U.S. Government Accountability Office investigation of the for-profit education sector in 2010, Career Education Corporation (CECO) hired a new president and CEO last month, Scott Steffey, to turn things around. Steffey commented, “Since joining Career Education a month ago, I believe even more strongly that this organization has the right tools to achieve high levels of academic and financial success…We are taking the necessary steps to right-size and re-engineer our organization to become more efficient and effective, better reflecting the support structure needed at our current enrollment levels.”

GuruFocus performed a thorough financial and performance checkup on CECO and discovered two warning signs: the company has a Piotroski F-Score of 2, which usually implies poor business operations, and its revenue has been in decline over the past 12 months. A good sign for CECO is that the company has enough cash to cover its debt.

The portfolio of Blum Capital Partners holds 10 stocks with a total value of $6.2 billion, with a quarter-over-quarter turnover of 0%. The company portfolio shows a large real estate sector of 48.5%. The firm’s investing philosophy states, "As a value-oriented investor, the firm looks to take advantage of out-of-favor or neglected situations that offer highly compelling entry valuations. By sourcing our ideas primarily from the public markets, we are able to take advantage of temporary dislocations in the price of equity securities which are often due to market over-reactions or excessive focus on short-term phenomena. Our philosophy is to exercise patience and discipline in waiting for such opportunities to present themselves."

Investor Guru Richard Blum achieved among the highest average return over 12 months in 2012, found here at the GuruFocus Score Board of Gurus.



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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 4.3/5 (8 votes)

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