ITT Educational shares keep soaring after better news

For the second straight day of trading, shares of ITT Educational Services Inc. soared Monday, as investors warmed to news that student enrollment during the spring and summer fell less than expected and that ITT has the cash on hand to get through recent troubles caused by student loan losses.

Carmel-based ITT, which operates for-profit technical institutes around the country, saw its stock price rise as much as 23 percent Monday morning to as high as $11.34 per share. On Friday, ITT’s shares spiked 65 percent.

ITT said Friday that new student enrollment fell 8.1 percent for its second quarter and 9.5 percent for its third quarter. It had warned in May that new student enrollment for the second quarter could be down 10 percent to 15 percent.

The company's total enrollment fell 6.3 percent in its most recent quarter, ending September with 57,172 students.

ITT hadn't updated investors on its financial performance or enrollment since May as it worked to revise prior financial statements. It filed that paperwork with the U.S. Securities & Exchange Commission on Thursday, clearing the way for the update.

ITT also said Friday that its cash balances improved 21.3 percent from its third quarter, by comparison to the same period last year. It had cash and cash equivalent of $206.9 million at the end of the quarter.

By year end, ITT will have $190 million in cash, estimated Bank of America analyst Sara Gubins, even after the company spends as much as $70 million on a disastrous private student loan program known as PEAKS. That program experienced unprecedently high defaults, and ITT guaranteed some of those losses. Also, after the SEC ruled earlier this year that ITT must record the loan program on its balance sheet, ITT has been working to restate its financial reports.

“This should be enough to largely mitigate liquidity concerns, in our view,” Gubins wrote in a research note on Monday. She said ITT’s stock is surging because “investors are assigning lower going concern risk.”

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