ITT Educational Services (ITT Educational Services) Operating Income : $76.5 Mil (TTM As of Jun. 2016)

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What is ITT Educational Services Operating Income?

ITT Educational Services's Operating Income for the three months ended in Jun. 2016 was $14.8 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Jun. 2016 was $76.5 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. ITT Educational Services's Operating Income for the three months ended in Jun. 2016 was $14.8 Mil. ITT Educational Services's Revenue for the three months ended in Jun. 2016 was $176.3 Mil. Therefore, ITT Educational Services's Operating Margin % for the quarter that ended in Jun. 2016 was 8.37%.

ITT Educational Services's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. ITT Educational Services's annualized ROC % for the quarter that ended in Jun. 2016 was 5.70%. ITT Educational Services's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2016 was 39.14%.

ITT Educational Services Operating Income Historical Data

The historical data trend for ITT Educational Services's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

ITT Educational Services Operating Income Chart

ITT Educational Services Annual Data

Trend

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Operating Income

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509.26

245.53

90.53

77.86

89.45

ITT Educational Services Quarterly Data
	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16
Operating Income	Get a 7-Day Free Trial															14.95	18.47	27.14	16.10	14.76

ITT Educational Services Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Jun. 2016 adds up the quarterly data reported by the company within the most recent 12 months, which was $76.5 Mil.

ITT Educational Services (OTCPK:ESINQ) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

ITT Educational Services's annualized ROC % for the quarter that ended in Jun. 2016 is calculated as:

	ROC % (Q: Jun. 2016 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2016 )	+	Invested Capital (Q: Jun. 2016 ))	/ count )
=	59.048 * ( 1 - 40.17% )	/	( (642.724	+	597.733)	/ 2 )
=	35.3284184	/	620.2285
=	5.70 %

where

	Invested Capital		(Q: Mar. 2016 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	622.391	-	56.694	-	( 108.663	-	max(0, 291.592	-	214.565	+	108.663	))
=	642.724

	Invested Capital		(Q: Jun. 2016 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	584.875	-	58.427	-	( 77.999	-	max(0, 255.263	-	183.978	+	77.999	))
=	597.733

Note: The Operating Income data used here is four times the quarterly (Jun. 2016) data.

2. Joel Greenblatt's definition of Return on Capital:

ITT Educational Services's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2016 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jun. 2016 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Mar. 2016		Q: Jun. 2016
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	53.36	/	( ( (138.242 + max(-102.368, 0))	+	(134.402 + max(-84.535, 0)) )	/	2 )
=	53.36	/	( ( 138.242	+	134.402 )	/	2 )
=	53.36	/	136.322
=	39.14 %

where Working Capital is:

	Working Capital		(Q: Mar. 2016 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(47.086	+	0	+	58.816)	-	(56.694	+	105.996	+	45.58)
=	-102.368

	Working Capital		(Q: Jun. 2016 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(49.242	+	0	+	56.737)	-	(58.427	+	85.83	+	46.257)
=	-84.535

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Jun. 2016) EBIT data.

3. Operating Income is also linked to Operating Margin %:

ITT Educational Services's Operating Margin % for the quarter that ended in Jun. 2016 is calculated as:

Operating Margin %	=	Operating Income (Q: Jun. 2016 )	/	Revenue (Q: Jun. 2016 )
	=	14.762	/	176.324
	=	8.37 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

ITT Educational Services Operating Income Related Terms

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ITT Educational Services (ITT Educational Services) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Education » ITT Educational Services Inc (OTCPK:ESINQ) » Definitions » Operating Income

Comparable Companies

Traded in Other Exchanges

N/A

Address

13000 North Meridian Street, Carmel, IN, USA, 46032-1404

Website

http://www.ittesi.com

ITT Educational Services Inc is a United States based proprietary provider of postsecondary degree programs in the United States based on revenue and student enrollment. The company provides technology-oriented undergraduate and graduate degree programs through its accredited postsecondary institutions, ITT Technical Institutes and Daniel Webster College, to help students develop skills and knowledge that can be used to pursue career opportunities in a variety of fields.

Executives

Tarasi Rocco F Iii	officer: EVP, Chief Financial Officer	C/O ITT EDUCATIONAL SERVICES INC, 13000 NORTH MERIDIAN STREET, CARMEL IN 46032
June M Mccormack	officer: EVP & President Online Div	13000 NORTH MERIDIAN STREET, CARMEL IN 46032
Brown C David Ii	director	3000 GALLERIA TOWER, STE 1000, BIRMINGHAM AL 35244
Thomas I Morgan	director	30541 CARNEY CREEK ROAD, BIGFORK MT 59911
Joanna T Lau	director	30 MONUMENT SQUARE, SUITE 220, CONCORD MA 01742
Ryan L Roney	officer: EVP,Chief Admin&Legal Officer	1541 REYNOLDS ROAD, CHARLOTTE MI 48813
Richard C Blum & Associates Inc	10 percent owner	909 MONTGOMERY STREET, SUITE 400, SAN FRANCISCO CA 94133
Blum Capital Partners Lp	10 percent owner	909 MONTGOMERY STREET, SUITE 400, SAN FRANCISCO CA 94133
Blum Strategic Gp Iii, L.l.c.	10 percent owner	909 MONTGOMERY STREET, SUITE 400, SAN FRANCISCO CA 94133
Blum Strategic Gp Iv, L.l.c.	10 percent owner	909 MONTOGOMERY STREET, SUITE 400, SAN FRANCISCO CA 94133
Saddlepoint Partners Gp, L.l.c.	10 percent owner	909 MONTGOMERY STREET, SUITE 400, SAN FRANCISCO CA 94133
Jeffrey R Cooper	officer: SVP, Chief Compliance Officer	231 N. MARTINGALE ROAD, SCHAUMBURG IL 60173
Blum Strategic Gp Ii Llc	10 percent owner	909 MONTGOMERY STREET, SUITE 400, SAN FRANCISCO CA 94133
Rand V Araskog	director	-, 125 WORTH AVENUE, SUITE 300, PALM BEACH FL 33480
Richard C Blum	10 percent owner	BLUM CAPITAL PARTNERS, LP, 909 MONTGOMERY STREET, SUITE 400, SAN FRANCISCO CA 94133