Earnings time

Some things to keep an eye out for tonight and tomorrow evening when NutriSystem (NTRI) and DeVry (DV) report.

NutriSystem: Focus in on guidance going into the next quarter, as they pre-announced top line revenues above their previous guidance a few weeks ago. It should give some indication as to whether they will be following a under promising, and over delivering strategy for the next little while. It will be interesting to note what the new CEO Joseph Redling will talk about with respect to stabilizing top line revenues given current economic weakness, and whether they can stabilize operating margins given their recent marketing and advertising push. Hopefully there will be some news of forward progress regarding their international expansion plans. Basically, is there enough strength in their actions to convince customers (new and reactivated ones) to pay out $300/month for their food program.

DeVry: This stock all comes down to the effects the student lending problems will have on their business. During the last earnings call, they had mentioned there were no concerns as only 5% of their revenues streams come from private lenders, and only 1% attributed to borrowers with poor credit. This provides some security for investors with respect to private lending exposure, but no news was given about FFEL/Title 4 loan impact. These types of loans are guaranteed and backed by the federal government, but many lenders have left this business due to the sudden freeze in the auction rate securities market. Basically there are limited bids to buy up student debt, thus reducing the availability of FFEL loans to students. With the recent news surrounding government legislation that would allow the federal government to buy up student debt, I am hoping there is some discussion about DeVry’s action plans regarding the speed at which this can be implemented if this bill were to pass. With the fall school season approaching, the speed at which the government and for-profit education companies act will be somewhat critical to ensure there are no disruptions to student enrollments. There should also be some discussion about how DeVry’s EDUCARD program (DeVry’s student financing program) is helping deflect some of the loan availability concerns and to what depth this program has to issue more loans to DeVry students, and the receivables collection success or erosion surrounding the program. (A detailed report on DeVry will be out shortly).