This week’s Danger Zone company — a trade school — is already down 30% in 2014, and is likely to drop another 50% as investors factor in its unreasonably high valuation, steadily declining enrollment and how often for-profit education is not profitable for its customers and industry. Bulls that focus on this company’s assets and clean balance sheet overlook the company’s $142 million in off-balance sheet debt (60% of its market value). With the rise of free community college offerings and increased scrutiny on for-profit colleges, there is little left this company can do to combat declining demand for its education. Investors should not expect the company’s current buyback and dividend to continue much longer.
André Rouillard and Sam McBride contributed to this report.
Disclosure: David Trainer, André Rouillard and Sam McBride receive no compensation to write about any specific stock, sector, or theme.