ITT Educational Hits 52-Week Low on Possible SEC Action - Analyst Blog

On Sep 19, 2014, shares of ITT Educational Services Inc. (ESI) dropped to a 52-week low of $4.47 and eventually closed at $4.95 with a negative year-to-date return of 85%.

What Led to the Drop?

ITT Educational Services' share price plummeted 35% on Sep 19 as the company declared in a U.S. Securities and Exchange Commission (SEC) filling that SEC's Division of Enforcement Staff has preliminarily determined to recommend an enforcement action against the company by SEC. The recommendation may involve civil enforcement action or administrative proceedings against the company.

Following the company's declaration, on behalf of stakeholders, two of the law firms Faruqi & Faruqi, LLP and Glancy Binkow & Goldberg LLP initiated investigation against potential claims of possible violations of federal securities laws.

ITT Educational Services has recently been in news for all the wrong reasons. The company has been facing various litigation processes in the last few months. There have been speculations that ITT Educational Services has engaged in improper and unlawful credit practices during the time period between Jul 2011 and Dec 2011. There have also been speculations about whether the company has violated any of the federal securities laws or has provided inaccurate statements regarding its true financial position.

ITT Educational also has not been able to file its earnings results since the fourth quarter of 2013 owing to uncertainty related to the accounting treatment of the PEAK Private Student Loan Program in the company's financial statements. In addition, ITT Educational withdrew its previously provided guidance for 2014 on May 22 as the company could face restrictions in terms of student financial aid funding. All of these uncertainties that loom over the education company have hurt investor confidence.

Other Stocks to Consider

Stocks in the education industry that are currently performing well include GP Strategies Corp. (GPX), Grand Canyon Education, Inc. (LOPE) and Apollo Education Group, Inc. (APOL). While GP Strategies sports a Zacks Rank #1 (Strong Buy), Grand Canyon Education and Apollo Education both carry a Zacks Rank #2 (Buy).

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