Barrington Says DeVry In A Precarious Position Following Acquisition

Barrington Research previewed DeVry Education Group Inc's (NYSE: DV) 4Q16 earnings in the note published Monday. The analysts estimate Q4 revenues of $463.4 million (down 2.1 percent year-over-year), EBITDA of $71.4 million, operating income of $50.1 million and diluted EPS of $0.58.

The company is scheduled to report results on August 18, after the market close.

While the analysts appreciate the company's pursuit of diversification into new verticals through the acquisition of an industry leader in Association of Certified Anti-Money Laundering Specialists (ACAMS), they believe the $330 million acquisition was not cheap at over 8x revenue and it consumes essentially all the net cash on the balance sheet, potentially putting the company into a precarious position given open regulatory investigations, most notably a FTC civil complaint filed on January 27, 2016, following a 24-month investigation.

Barrington has a Market Perform rating on the company.