Investors dumped shares of ITT Educational Services Inc. on Thursday morning as the company remained mute on its year-end profit forecast while announcing that its bad-debt expenses were rising faster than revenue.
The Carmel-based for-profit educator saw its stock price tumble 12 percent in morning trading, to as low as $96.90 per share. The stock is off 27 percent since it peaked in early February.
That was in spite of reporting third-quarter profits Thursday of $209.2 million, up nearly 50 percent compared to the same quarter a year ago.
The company earned $2 per share, topping Wall Street analyst expectations of $1.97 per share, according to a survey by Thomson Financial Network. A year ago, ITT earned $1.28 per share.
Revenue in the third quarter spiked 33.6 percent, to $339.6 million.
In spite of all that growth, ITT made no comment about its year-end profit forecast in a press release Thursday morning. After reporting its second-quarter results in July, ITT raised its year-end profit forecast from a range of $7 to $7.25 to a revised range of $7.55 to $7.85.
A Deutsche Bank analyst called the silence “troubling,” according to Bloomberg News.
Some analysts and investors are worried that the recession is keeping fewer ITT graduates from gaining jobs, causing them to default on their loans.
Unpaid debt as a percentage of revenue reached 6.8 percent, up from 5 percent a year ago. CFO Daniel Fitzpatrick said earlier this year that bad-debt expenses could rise as high as 7 percent of sales by the end of the year.
Most of the unpaid loans are owed to the federal government, but ITT can run afoul of regulators if its default rates get too high.
Also, the company started lending some of its own money this year as sources of private lending dried up. That has helped keep enrollment high.
Enrollment of new students slowed a bit in the third quarter compared to the second quarter, but still surged to 27,738, up 27.2 percent from the same period a year ago. In the second quarter, new-student enrollment soared 33.5 percent from the second quarter of 2008.
ITT now has a total of 79,208 students on its 117 campuses nationwide.
The Associated Press contributed to this story.