ITT Educational Services, Inc. (ESI) Tries to Scare the Bears

ITT Educational Services (ESI) tries to prove the bears wrong

by Mark Fightmaster

Published on Jun 12, 2015 at 2:00 PM
Updated on Jun 24, 2020 at 10:16 AM

This morning, for-profit educator ITT Educational Services, Inc. (NYSE:ESI) made waves by topping expectations with its first-quarter earnings announcement. During the period, ESI earned 44 cents per share -- handily topping the Street's expectations of 37 cents per share. As if the earnings news wasn't good enough, revenue for the quarter checked in at $230 million compared to estimates calling for $216.6 million. On a negative note, the quarterly revenue is lower than the first quarter last year.

Technically, the shares gapped higher this morning, riding the wave of good news. However, the stock has since pared its gains, backpedaling from a test of resistance at its 80-day moving average.

While the news itself wasn't enough to propel the stock through this resistance, additional downside could be limited, since there's plenty of negative sentiment already priced in. ESI's Schaeffer's put/call open interest ratio (SOIR) of 1.51 ranks higher than 92% of the past year's worth of readings. Plus, short interest accounts for 63.9% of the stock's float, and two of the three analysts covering ESI rank it a "hold" or worse.

That said, the stock's year-to-date loss of 47.9% merits the bearish opinions, so the bears on the Street may be a bit too entrenched for one earnings beat to shake them from their perch. While upgrades or short-covering could provide some momentum for the stock in the future, ITT Educational Services, Inc. will likely need to reverse its unimpressive price action before these skeptics are motivated to reevaluate their stance. At last check, ESI was up 20.7% at $5.01.


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