[Video] Is For-Profit Education Profitable? ITT Tech Valuation

by Dan Myers

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There is a lot of controversy on whether or not the profit motive should play a role in the education of society.

Those against it claim that corporations will just churn students through and not care whether or not they actually learn.

The pro side claims that if the corporations do not create value for the students, long term profits would decline and thus there is a motivation to provide the best education possible.

As that battle rages on, for profit education companies have taken a beating in the market.  Those on the negative side seem to have the upper hand today.

The question now becomes:  Is this the “blood on the streets” time to buy into these companies or is this the next buggy whip industry?

Introducing ITT Educational Services (ESI)

ITT Educational Services, commonly known as ITT Tech, provides post high school education in various fields.

Their programs range from Information Technology, Electronics, Drafting & Design, Business and Nursing.

ITT Tech has been around since the 1940’s so they have a well-established brand and business model.

What’s Explained in the Video

  • ITT Tech’s business model
  • Review of their financials
  • Why a high debt ratio is different from debt to free cash flow
  • Why there is a drop off in revenue recently
  • Valuing a business based upon only the parts we think are viable
  • The risks inherent in the education industry
  • Identifying businesses as Graham value investments vs. Buffett value investments

Enjoy the Discussion on ITT Tech

Part 1 | Part 2 | Part 3

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