Both the joint venture agreement and the cabin assembly contract stem from a MOU signed in Feb 2007 by the companies to explore the creation of aerospace operations in India. The cabin assembly contract signed in June 2009 has led to ongoing construction in Hyderabad, in the state of Andhra Pradesh, where TASL will assemble S-92 helicopter cabins starting in 2010. 

The new joint venture will be positioned to manufacture components for other aerospace Original Equipment Manufacturers (OEMs) as well as detailed parts for the Sikorsky S-92® helicopter cabin. It is expected that the joint venture operations will be housed in a second greenfield facility that will be constructed in Hyderabad, next to the cabin assembly building. Construction for the joint venture company's facility is targeted for completion by 2011, with production beginning in late 2012.

Tata companies operate in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. They are, by and large, based in India and have significant international operations. The total revenue of Tata companies, taken together, was $70.8 billion in 2008-09, with 64.7% of this coming from business outside India, and they employ around 357,000 people worldwide.
 
United Technologies provides high technology products and services to the building systems and aerospace industries worldwide. Operating units include businesses with operations throughout the world. Otis, Carrier and UTC Fire & Security (collectively referred to as the commercial businesses) serve customers in the commercial and residential property industries worldwide; Carrier also serves commercial, industrial, transport refrigeration and food service equipment customers.

Pratt & Whitney, Hamilton Sundstrand and Sikorsky (collectively referred to as the aerospace businesses) primarily serve commercial and government customers in both the original equipment and aftermarket parts and services markets of the aerospace industry; Hamilton Sundstrand and Pratt & Whitney also serve customers in certain industrial markets. Major competitor is Boeing Co. (BA).
 
We currently have a Neutral recommendation on UTX.

Company Description

Harris is an international communications and information technology company serving government, defense and commercial markets in more than 150 countries. Headquartered in Melbourne, Florida, the company has annual revenue of approximately $5 billion and more than 15,000 employees - including nearly 7,000 engineers and scientists.

A Solid First Quarter

The company recently posted fiscal first-quarter earnings of 83 cents per share, topping the Zacks Consensus Estimate by 9%. Revenue climbed from last year's $1.17 billion to $1.20 billion.

Management said new orders, revenue and earnings exceeded expectations in the first quarter as a result of strong performance in both the RF Communications and Government Communications Systems segments.

Higher Forecasts

The company also hiked its fiscal year earnings guidance to a rang of $3.74 to $3.84 per share, versus its previous range of $3.25 to $3.40 per share.

Analysts polled by Zacks followed suit, calling for earnings of $3.85 per share for the year ending June 2010. Last month, the fiscal year Zacks Consensus Estimate stood at $3.31 per share.

Strong Fundamentals and Robust Momentum

Harris offers a return on equity (ROE) of 25%, squashing the industry average of 3%. The company pays a dividend yield of 2%, while most of its industry peers pay no income.

Shares of HRS have been surging lately. Trading near a 52-week high, Harris has outpaced the market by about 40% over the past 3 months. Zacks Investment Research

Company Description

Syntel Inc. provides information technology and knowledge process outsourcing services worldwide. In describing its business, the company explains that it delivers flexible, custom Information Technology and Business Process outsourcing solutions that improve quality and reduce costs. Syntel serves the financial services, healthcare, insurance, automotive and retail industries among others.

Solid Income

The company recently declared a regular quarterly dividend of 6 cents per share, noting that it is payable on January 14 to shareholders of record at the close of business on December 31.

The 6-cent dividend translates into an industry-leading yield of 0.6%.

Strong Third Quarter

In late October, Syntel reported third-quarter earnings of 73 cents per share, eclipsing last year's 54 cents and topping the Zacks Consensus Estimate by 24%.

Revenue was 1% year-over-year, totaling $104.7 million and was 5% above the previous quarter's result.

Management said the strong financial and operating discipline at Syntel has been evident in its financial performance during a very difficult nine month period. The company expects that as the demand environment for offshore services improves, margin pressure will increase.

Higher Forecasts

Syntel noted in the quarterly report that it sees full year earnings ranging between $2.60 and $2.65 per share.

Analysts polled by Zacks are forecasting 2009 earnings of $2.64 per share, up from last month's $2.44.

Strong Industry Comparisons

The technology services player has a return on equity (ROE) of 40%, more than doubling the industry-average of 14%. The company boasts a solid balance sheet, showing no debt. Its net profit margin of 27% is well above the industry average of 5%. Zacks Investment Research

Revenues in the United States declined 3% to $542 million as growth in the U.S. federal government business was offset by declines in its commercial business. International revenues declined 18% to $618 million.

On a segment basis, revenues from the services department declined 13% year over year. Revenues from the technology department declined 4% year over year.

Gross margin improved to 26.4% from 23.9% in the previous quarter and 22.2% in the year-ago quarter as the company benefited from improved cost efficiencies in services delivery and a stronger mix of high-end enterprise servers. Management also made significant reductions in selling, general, and administrative expenses to align the cost model with the market demand. Consequently, operating profit margin increased to 10.2%, compared with 2.9% recorded a year ago and 6.7% in the previous quarter.

EPS came in at $1.48, easily beating the Zacks Consensus Estimate of 50 cents, primarily due to the reverse stock split.

During the quarter, the company generated $94 million of cash. Capital expenditures in the third quarter declined to $48 million compared to $78 million in the year-ago quarter as the company continued to tightly focus its investments.

As of Sept 30, 2009, Unisys had $474 million of cash and equivalents and total debt of $911 million. Unisys also had $1410.5 million of long-term post-retirement liabilities on its balance sheet.

Earlier, in the quarter, Unisys successfully completed private offers to exchange unsecured senior notes for secured senior notes, cash and common stock. As a result of the exchange, Unisys reduced its long-term debt and cut its 2010 debt maturities to $66 million but increased shares outstanding to 42.3 million shares (adjusted for the reverse stock split).

Last month, Unisys executed a reverse stock split of the company’s common stock at a ratio of 1:10. Management is currently engaged in a multi-step strategy of reducing costs and focusing resources on high growth areas of the IT market. Unisys is now expected to demonstrate tangible results from its ongoing restructuring, after several mistakes in execution in the past. Although management is making progress in expanding margins, we remain cautiously optimistic regarding the pace of IT spending recovery and the maturing of higher-margin legacy product sales and services.

Our long-term recommendation for Unisys remains unchanged at Neutral, which means the company will perform roughly in line with the broader market.

Based in Blue Bell, Pennsylvania Unisys is a worldwide information technology company.

Semiconductor revenues came in at $371.6 million, up 8% sequentially but down 25.7% year over year. Storage Systems revenues came in at $206.6 million, up 16.8% sequentially but down 3.4% year over year.

Gross margins came in at 45.5%, an increase of 340 basis points from the previous quarter and exceeded management’s guidance range by 50 basis points.

Net income jumped to $119 million from a net income of $7 million in the previous quarter and a net income of $94 million in the year-ago quarter. Earnings per share came in at 18 cents. Operating cash flow came in at $69 million.

Going forward, management is encouraged by early signs of economy reviving as businesses resume spending in information technology. Demand for storage and servers have started to improve being driven by the need to upgrade infrastructure and also by new product cycles such as Intel’s Nehalem server platform. The company expects increased deployment in cloud computing environments by large companies like Amazon (AMZN) and Microsoft (MSFT).

The company expects revenues of $605 million and $645 million for the fourth quarter of 2009. Gross margin is expected around 45.5% – 47.5%. EPS is estimated between 7 cents and 13 cents.

Although the demand environment and near-term visibility remain challenging, LSI's core storage semiconductor and systems ramps and market positions remain relatively intact, leading to healthier growth in late-2009. It is expected that LSI's modest exposure to the PC/server market may lead to better flexibility compared to its competitors, Adaptec Inc. (ADPT) and Applied Micro Circuits Corp. (AMCC), which are experiencing some softness in end-market demand for PCs and servers and related storage products.

LSI’s continuing adoption of newer storage protocols such as SAS and ramp in new entry-level storage systems may steadily improve its position in the hard drive market. LSI's cost-control efforts have also been quite impressive. Given the gradual improvement in the demand environment following a soft spending phase in the first half of 2009, we maintain our Neutral rating on shares of LSI.

Headquartered in California, LSI designs, develops and markets complex high-performance semiconductors and storage systems.

Excluding certain non-recurring items, adjusted earnings per share came in at 11 cents, edging past the Zacks Consensus Estimate by a penny.

The company recorded a growth of 3.7% to $489.8 million, compared to $472.1 million in the year-ago quarter. The expansion was primarily driven by the US federal sector, increased transaction volumes and growth in maintenance renewals. It was partially offset by the sluggish corporate spending environment, which affected VMware's license revenues.

In terms of geographic regions, U.S. revenues slipped 1% year over year to $246 million, while international revenues grew 9% to $244 million driven by growth in Canada, South America and Asia-Pacific.

VMware spent $133.5 million during the quarter towards research and development, a growth of 56.5% from $85.3 million in the year-ago period. Sales and marketing expenses also increased 10.3% year over year to $185.2 million, primarily due to worldwide promotional efforts related to the new version of the company's virtualization software, vSphere 4. Moreover, additional royalties and commissions paid to partners coupled with a weak dollar also contributed to total operating expenses, which increased 25.7% year over year to $466.5 million. Accordingly, operating income declined 77% year over year to $23.2 million, while operating margin contracted by 16.7% to 4.7%.

During the quarter, the company wrapped up the acquisition of SpringSource, a company engaged in enterprise and web application development and management. VMware paid about $420 million for the acquisition, including $356 million in cash, and expects the deal to have a dilutive impact on operating margins during the fourth quarter.

The company ended the quarter with cash and cash equivalents of $2.2 billion, compared to $1.7 billion in the year-ago period. During the quarter, VMware generated $199.4 million of cash from operations and deployed $14.2 million towards capital expenditure apart from the cash utilized for the acquisition.

Moving forward, management expects fourth-quarter revenues between $540 million and $560 million, citing improved short-term visibility in its business. However, the company plans to move ahead conservatively, assuming a slow recovery in macroeconomic conditions.

Meanwhile, the Zacks Consensus Estimate, derived from 15 covering analysts, is currently pegged at 48 cents per share for the full-year, which has remained constant over the past 3 months. However, the most accurate estimate is slightly more bullish at 51 cents per share.

VMware is a provider of virtualization solutions from the desktop to the data center. The company’s virtualization solutions address a range of information technology problems that include cost and operational inefficiencies, business continuity, software lifecycle management and desktop management. VMware works closely with over 900 technology partners, including server, microprocessor, storage, networking and software vendors.

Company Description

Corinthian Colleges is a post-secondary education company that offers diploma programs and associates, bachelor's and master's degrees in many areas including healthcare, business, criminal justice, transportation technology, construction trades and information technology.

The company enrolls about 69,000 students at over 100 campuses within the United States and Canada.

Corinthian Aiming for 4 Surprises in a Row

The company is expected to report first quarter 2010 results on Oct 29. The Zacks Consensus Estimate has been holding at 27 cents in the last 60 days, up from 15 cents. The full year estimate also jumped in the last 2 months by 21 cents to $1.34 per share.

Analysts now expect year over year earnings growth in fiscal 2010 of 59.2% and with good reason, given the strong fourth quarter results.

In the fourth quarter, revenues climbed 29% to $353.5 million from $274 million from the year ago period. Total students rose 24.4% from the fourth quarter of 2008. The company acknowledged that the recession increased its growth momentum as more people sought out further education.

First Quarter Guidance

On Aug 25, when the company reported fourth quarter results, it also provided bullish guidance for the first quarter of 2010.

It expects student start growth of 15% to 17% compared to the first quarter a year ago. Revenues are forecast to range from $375 million to $385 million. Earnings per share are expected between 26 and 29 cents.

For the full year, it expects earnings per share of $1.30 to $1.36. Analysts are on the high side of the guidance, at $1.34. Will the company continue its earnings surprise streak?

Value Fundamentals

Corinthian Colleges is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 12.68 and has a price-to-book ratio of 2.86. The company has a 5-year average return on equity (ROE) of 11.81%.

Zacks Investment Research

Company Description

International Business Machines develops and manufactures information technology products and services worldwide. Big Blue was founded in 1910 and has a market cap of $161 billion.

Shares of IBM recently hit a new 52-week high above $122 after the technology sector caught a bid from Dell's strategic acquisition, optimistic words from Intel's CEO and FaceBook announcing it was cash flow positive. Taking a look back, IBM also helped its cause with better than expected second-quarter results, reported on July 30.

Second-Quarter Results

Sales were down 13% from last year to $23.3 billion, but earnings were better than expected, coming in at $2.32 per share, 29 cents ahead of the consensus. IBM has beat in each of the last four quarters by an average of 14 cents, or 6%.

IBM compensated for its revenue dip with higher gross margins, up more than 2% from last year to 45.5%.

Strong Cash Position

In spite of the company's debt load of $29.4 billion, it maintains a strong cash position of $12.5 billion.

Estimates Holding Steady

Estimates have held mostly steady over the last few months, with the current year at $9.77 per share, and the next-year estimate pegged at $10.71, a solid 10% growth projection.

Valuation

Based upon the current-year estimate, this growth and income pick also has value, trading at just 10X, a nice discount to the overall market.

The Chart

Shares of IBM recently hit a new 52-week high after crossing a short-term level of resistance just above the $122 mark, take a look below.

Zacks Investment Research

Company Description

Strayer Education provides higher education for working adults, offering undergraduate and graduate degree programs in business administration, accounting, information technology, education, health care and public administration to approximately 46,000 working adult students at 71 campuses in 15 states and Washington, D.C. and worldwide via the Internet.

Bullish Projections and a Share Price Surge

The company continues to see higher earnings forecasts. The current full-year Zacks Consensus Estimate of $7.50 per share was increased from the 3 months-ago level of $7.27.

For 2010, the Zacks Consensus Estimate stands at $9.25 per share, up from the $8.88 over the past 3 months.

In the second-quarter report, Strayer noted that solid summer enrollment figures led to a third-quarter earnings guidance that ranged between $1.14 to $1.16 per share.

In response, the Zacks Consensus Estimate for the third quarter shot up to $1.16 per share from the 3 months-ago forecast of $1.05.

Third-quarter results are scheduled for release on Oct 29.

Shares of STRA surged recently on a Government Accountability Office (GAO) report on proprietary schools. The report offered mild criticism on the for-profit college-level schools sector, while investors had feared more severe criticism.

A Solid Second Quarter

For the second-quarter, STRA saw earnings of $2.00 per share, topping the previous year's $1.50 and exceeding the Zacks Consensus Estimate by 2%. Revenues jumped 29% year-over-year to $125.9 million thanks to a boost in enrollment and a 5% rise in tuition.

Stellar Fundamentals

Strayer continues to boast a solid balance sheet, showing no debt. The company's return on equity (ROE) of 56% squashes the industry average of 16%. Strayer's net profit margin of 21%, more than doubles the industry average of 9%. STRA also pays an industry-leading dividend yield of 1%. Zacks Investment Research

LINC is a leading and diversified for-profit provider of career-oriented post-secondary education. It offers degree and diploma programs in automotive technology, health sciences, skilled trades, business and information technology, and hospitality services.

It is part of the Schools industry on the Zacks #1 Rank List, which includes 220 stocks today. The list also includes 2 other names from this space: Bridgepoint Education, Inc. (BPI) and Universal Technical Institute, Inc. (UTI).

A Better-Than-Expected Third Quarter

On Monday, LINC announced that third-quarter earnings and revenue will surpass its previous outlook, due to starts in the quarter to date. The company had anticipated earnings per share between 34 cents and 36 cents, with revenue at $134 million to $138 million.

(The Zacks Consensus Estimate for the quarter has stood still at 36 cents, most likely because LINC was vague and didn't offer a specific new guidance.)

It expects to enter the fourth quarter with about 9,000 more students than a year earlier, or around 5,600 more students on a same-school basis.

(At the same time, LINC also announced a public offering of 4 million shares of its common stock being sold by a selling stockholder.)

Earnings Estimates

The last 2 months have seen a sharp advance in earnings estimates for LINC. The Zacks Consensus Estimate for this year is at $1.43 per share; nearly 11% better than the $1.29 estimate from 60 days ago.

The Zacks Consensus Estimate for next year is up 15.4% in that timeframe to $1.80 per share from $1.56. The guidance is also approximately 26% better than the outlook for this year.

Second-Quarter Report

Sparking the upward analyst revisions was a strong second-quarter report on Aug 5, which included a raised outlook for 2009. The company stated that earnings per share would be between $1.40 and $1.45 per share, instead of its earlier guidance of $1.25 to $1.30.

Likewise, the revenue estimate was enhanced to between $518 million and $525 million, versus the previous outlook of $505 million to $515 million.

For the second quarter itself, LINC continued a string of better-than-expected quarterly profit performances. It announced earnings of 27 cents per share, beating the Zacks Consensus Estimate of 20 cents by 35%. Over the past 4 quarters, the company has put together an average surprise of 125%.

Revenue increased nearly 51% to $128.1 million.

Zacks Investment Research

SXC is a leading provider of pharmacy benefit management (PBM) services and Healthcare Information Technology (HCIT) solutions to the healthcare benefits management industry. It is the only company from the Internet Software industry on today's Zacks #1 Rank List, which includes 223 stocks.

Normally SXC has a volume around 328,000, but today the volume has soared to almost 2.6 million.

Pricing of Public Offering

On Monday, SXC announced a public offering of common shares, which was increased to 4.5 million from 3.5 million yesterday. (This enhancement is a good sign that the company's shares are in demand.) On Thursday, the company also announced the pricing to the public of $41.50 per share. The offering is expected to close on Sep 23.

Net proceeds from the offering is anticipated at around $176.6 million, or $203.3 million if underwriters exercise their over-allotment option in full. It plans to use these proceeds for "general corporate purposes", which could include financing for acquisitions and transactions, capital expenditures funding and providing working capital.

Earnings Estimates

The Zacks Consensus Estimates for this year and next are at $1.49 and $1.85 per share, respectively. They have both displayed solid improvement over the past 2 months.

The estimate for this year is up 52% from 98 cents on the back of 13 covering analysts, while the expectation for next year has risen 53% from $1.21 with 15 analysts.

At the moment, next year's profit is expected to advance by about 24% over this year.

Strong Second Quarter

In addition to the offering, SXC has a solid record of beating quarterly earnings expectations. Over the past 4 quarters, it has amassed an average surprise of 104%.

The company announced second-quarter results on Aug 6, which included record sales and profitability. This performance was attributed to new contract wins, strong client retention, cross-sell success and operational synergies.

Specifically, the company earned 53 cents per share, excluding items, which surpassed the Zacks Consensus Estimate by as much as 152%. It was also well ahead of the year-ago performance.

Revenue advanced to $320.8 million from $227.8 million.

The performance convinced SXC to raise its fiscal 2009 outlook. It now plans on revenue between $1.35 billion and $1.4 billion, compared to the prior estimate of $1.25 billion to $1.35 billion.

Earnings per share are now expected between $1.42 and $1.50, compared to 93 cents to $1.01 previously. (Adjusted earnings per share are seen between $1.62 and $1.70, instead of $1.13 to $1.21.)

Zacks Investment Research

The companies currently offer pre-integrated software stacks for multi-service business gateways that run on communications processors developed by LSI. They have now extended their collaboration to wireless and additional wireline infrastructure applications.

Headquartered in California, LSI designs, develops and markets complex high-performance semiconductors and storage systems. Aricent is a global innovation, technology and services company focusing exclusively on communications.

LSI and Aricent expect the pre-integration of their products to enable Original Equipment Manufacturers (OEMs) to reduce cost of developing products and marketing time by half. Telecom OEMs generally integrate software and hardware components from various suppliers in order to create next-generation systems for service provider networks. LSI expects that this collaboration will help it to provide pre-integrated, pre-optimized solutions to OEMs that reduce the time and cost of delivering systems.

Meanwhile, Semiconductor Industry Association (SIA) recently said that while monthly worldwide sales of semiconductors rose 5.3%, the year-over-year rate of decline had moderated. The improvement in chip sales reflects improving demand in the consumer sector, particularly for products like netbook PCs and mobile phones.

SIA also said that although sales of Information Technology products to the enterprise sector continue to be hurt by caution and longer replacement cycles, there was evidence of a return to seasonal industry patterns.

LSI's modest exposure to the PC/server market is expected to allow the company better flexibility than its competitors, Adaptec Inc. (ADPT) and Applied Micro Circuits Corp. (AMCC), which are experiencing some softness in end-market demand for PCs and servers and related storage products.

Last month, LSI posted better-than-expected results for the second quarter due to growth in both the storage and networking businesses. With the recovery in chip market, many companies are boosting their quarterly projections. We expect LSI’s top line to improve after a significant decline in the second half of 2008.

Company Description

Lincoln Educational Services began as a Technical Institute more than 60 years ago and now offers post-high school offerings in five areas of study: automotive technology, health sciences, skilled trades, business and information technology and hospitality services.

It operates 43 campuses in 17 states under a variety of brand names including Lincoln College of Technology, Lincoln Technical Institute, Nashville Auto-Diesel College, Southwestern College, Euphoria Institute of Beauty Arts and Sciences, and the Connecticut Culinary Institute, among others.

Lincoln Saw Record Revenues in the Second Quarter

On Aug 5, Lincoln reported second quarter results that saw record earnings per share and revenues. The company surprised on earnings by 35% reporting 27 cents compared to the Zacks Consensus Estimate of 20 cents. It easily surpassed the year ago number of 5 cents per share.

Revenues soared 50.6% to $128.1 million from $85.1 million in the year ago quarter.

The company is operating on all cylinders as people look to return to school during the economic downturn.

The average student population increased by 42% year over year. On a same school basis, it rose 28.8% compared to the second quarter of 2008. The company doesn't seen any significant changes in the macroeconomic environment it operates in that would impact the second half of 2009.

Lincoln completed its acquisition of Clemens College, a regional accredited college, during the quarter. Combined with its Briarwood College, also a regional accredited college, the company is looking to use these schools as a base from which to expand its on-line programs.

It expects to launch the on-line initiative in full in the second quarter of 2010.

Lincoln Raised 2009 Guidance

Given the record revenues in the second quarter, the company raised its previously issued full-year guidance to a range of $1.40 to $1.45 from $1.25 to $1.30 per share which represents growth of 79% to 86% over 2008.

The company also forecast third quarter EPS between 34 and 36 cents.

Zacks Consensus Estimates Rise

Given the increased guidance, covering analysts scrambled to raise estimates in the last 60 days.

The third quarter Zacks Consensus Estimate jumped to the high end of the company's range at 36 cents per share from 30 cents before the guidance.

The 2009 Zacks Consensus Estimate recently rose a penny to $1.43 per share. Analysts expect year over year revenue growth of 82.78%.

Value Fundamentals

Lincoln Educational Services Corp. is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 14.6 and a price-to-book ratio of 2.71. The company also has a solid 5-year average return on equity (ROE) of 11.44%.

Zacks Investment Research

Company Description

CGI Group, Inc., through its subsidiaries, provides information technology and business process services, specializing in systems integration and consulting services. The company was founded in 1976 and has a market cap of $3.21 billion.

Shares of GIB are up big over the last 6 months on the heels of market stability and better than expected third-quarter results, reported on July 29.

Third-Quarter Results

Sales were mostly flat from last year, coming in at $950.4 million. But earnings came in ahead of expectations at 23 cents per share, 2 cents better than the Zacks Consensus Estimate.

The company has produced steady earnings over the last year, beating in each of the last 4 quarters by an average of 2 cents, or 7.51%.

Paying Down Debt

CGI noted that it made considerable progress in paying down most of its debt, with payments totaling $271.2 million through the first 9 months of the year, leaving just $15.9 million remaining.

Estimates Up

After the solid quarterly performance and the debt repayments, estimates moved higher, with the current year adding 4 cents and climbing to 93 cents per share. The next-year estimate is pegged at $1.01, a 9% growth projection.

Valuation

In spite of the big gains of the last few months, this stock still trades in value territory with a P/E multiple of just 11X, a nice discount to the markets multiple of about 18X.

The Chart

Shares of GIB have been rallying since bottoming out just above $6.50 in early March, having recently topped off above $10.50. Take a look at the nice move below.

Zacks Investment Research

Company Description

Strayer Education provides higher education for working adults, offering undergraduate and graduate degree programs in business administration, accounting, information technology, education, health care and public administration to approximately 46,000 working adult students at 71 campuses in 15 states and Washington, D.C. and worldwide via the Internet.

Bullish Projections

The company continues to see higher earnings forecasts. The current full-year Zacks Consensus Estimate of $7.48 per share climbed 4 cents from earlier this month, when STRA was previously featured as Growth and Income pick, and shot up by 21 cents from the month-prior projection.

For 2010, the Zacks Consensus Estimate stands at $9.16 per share, up from the $9.16 that was projected when STRA was featured earlier this month and last month's $8.88.

In the second-quarter report, Strayer noted that solid summer enrollment figures led to a third-quarter earnings guidance that ranged between $1.14 to $1.16 per share.

In response, the Zacks Consensus Estimate for the third quarter shot up to $1.16 per share from last month's $1.05.

Robust Results

The company recently posted second-quarter earnings of $2.00 per share, topping the previous year's $1.50 and exceeding the Zacks Consensus Estimate by 2%. Revenues jumped 29% year-over-year to $125.9 million thanks to a boost in enrollment and a 5% rise in tuition.

Summer enrollment was up 24% to 42,516 students, versus the year-prior 34,176 students.

The company stated that it will open 4 new campuses in preparation for the fall term. The 4 campuses, in addition to the 7 that opened earlier this year, will complete the Strayer's planned 11 openings in 2009.

Stellar Fundamentals

Strayer boasts a solid balance sheet, showing no debt. The company's return on equity (ROE) of 56% squashes the industry average of 18%. Strayer's net profit margin of 21%, nearly doubles the industry average of 11%. STRA also pays an industry-leading dividend yield of 1%. Zacks Investment Research

The Recession Changes Thinking on Higher Education

Education was long seen as untouchable by supply and demand criteria. The thinking went that no matter how much you charged there would always be a group of students eager for the credential.

The recession is changing all those thoughts in a sudden and dramatic way.

According to a June report by the National Association of Independent Colleges and Universities, tuition and fees at private colleges and universities are expected to rise in 2009-2010 an average of 4.3%, the lowest percentage increase in 37 years.

However, private schools expect enrollment to drop as the recession eats into the ability to pay the higher costs.

But the demand for higher education isn't going away. People still want degrees in order to boost employment opportunities. The rules are simply being re-written and many students are looking beyond the traditional 4-year college or university in order to obtain it.

3 Companies Expanding as Education Goes Global

As an investor, now is a great time to consider the future of higher education and who is going to benefit under the new reality.

Not everyone will be studying for a BA in History at the State University. Many students will be looking to get more bang for their buck and will want immediate career training.

Many older students will be looking to make career changes due to the economy. Additionally, many of the students will no longer be going to classrooms, but will be taking their classes only online.

The dynamics of higher education are changing quickly and these three companies are already cashing in.

Strayer Education, Inc. (STRA)

Strayer has been in business since 1892 and now boasts 46,000 adult students at 71 campuses around the country. It also offers courses to international and American students over the Internet.

The company focuses on undergraduate and degree programs in business administration, accounting, information technology, education, public administration and criminal justice.

The first six months of 2009 have been strong for the company. Revenues rose 28% to $250.4 million compared to $195 million in the first six months of 2008 as enrollment increased and a 5% increase in tuition.

Strayer is opening up 4 new campuses in the fall term but online classes are also booming. Global online student enrollment increased 43% in the second quarter. Students taking 100% of their classes online (including those who are located at one of the campuses) rose 25%. 31,338 students are now taking at least one class online.

The company has a strong financial foundation. It has no debt. Strayer also has a cash position of $90.4 million.

Strayer is a Zacks #2 Rank (buy) stock. It is trading with a forward P/E of 28.96. The company has a phenomenal 1-year return on equity (ROE) of 55.93.

Apollo Group Inc. (APOL)

Apollo Group is a newer entrant in the education business, having been in business just 30 years. Its brands are familiar as it runs the University of Phoenix, whose marketing campaign is seen across the country.

It also offers programs through the Institute for Professional Development, College for Financial Planning, Western International University, Meritus University, Insight Schools and Apollo Global.

Revenues soared 25.9% year over year for the fiscal third quarter to a record $1.05 billion as enrollment jumped 21.8% at the University of Phoenix. During the quarter, degreed enrollment increased to 420,700.

Apollo Group is a Zacks #1 Rank (strong buy) stock. It has attractive valuations, with a forward P/E of just 15.9. The company has a stellar 1-year return on equity (ROE) of 60.09%.

Lincoln Educational Services Corporation (LINC)

Lincoln Educational Services started as a Technical Institute more than 60 years ago and now offers post-high school offerings in five areas of study: automotive technology, health sciences, skilled trades, business and information technology and hospitality services.

It operates 43 campuses in 17 states under a variety of brand names.

Lincoln saw record revenues in the second quarter that jumped 50.6% to $128.1 million from $85.1 million a year ago.

Average student population increased by 42% year over year. On a same school basis, it rose 28.8% compared to the second quarter of 2008. The company doesn't seen any significant changes in the macroeconomic environment it operates in that would impact the second half of 2009.

Lincoln is bullish and raised full year guidance. It now sees 2009 revenues up an impressive 37% to 39% compared to 2008.

Lincoln Education Services is a Zacks #1 Rank (strong buy) stock. It also has attractive valuations with a forward P/E of only 15.9. The company has a solid 1-year return on equity of 17.1%.

Change Your Thinking About Higher Education

All 3 of these companies are posting outstanding year over year revenue increases in very difficult economic conditions.

The tide is turning in higher education against the traditional model. Look outside the box for investment ideas.

Ways to Search for Further Education Companies

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The changes announced will include the setting up of an operating committee comprised of two new national positions, responsible for sales and content, as well as four other positions with responsibility for operations, finance, information technology and human resources.

• Bruce Hartmann, the President and Publisher of the News Sentinel in Knoxville, TN, will become the Vice President of Sales (print and interactive) and will be responsible for all advertising and circulation revenue across the division, and all Scripps advertising and circulation sales directors will report to him.
• Rusty Coats, the Vice President of Interactive for the newspaper division, will be responsible for all content and marketing areas, and interactive operations and strategic third-party relationships such as with Yahoo! (YHOO) and other national interactive brands.
• Frank Wolfe, the Director of Operations, will become Vice President of Operations for the newspaper division, and will have national responsibility for production and circulation operations.
• Robin Davis, the division's Vice President of Finance and Administration, will continue in her role.
• Jim York, Director of Information Technology for the newspaper division, will become the Vice President of Information Technology, and will be responsible for the standardization and rationalization of the IT function within the division.
• Mary Minser, the division's Vice President of Human Resources, will continue in her role.

E.W. Scripps, like many other publishing houses, has been finding it difficult to keep advertising sales up. This is primarily because readers are rapidly shifting to online reading and moreover, the recession has hurt advertising sales both on and off line.

Newspaper revenue in the second quarter had declined 22.1% year-over-year to $113 million. This was due to lower local and classified advertising sales, particularly weak automotive, financial services and retail category advertising. Online revenue was also down 25% to $7.3 million due to softness in print classified advertising.

During the first half of fiscal 2009, advertisement sales of the company declined 29% to $165 million. Further, earlier this year, unable to cope up with the severe recession, management had decided to divest its Denver-based daily newspaper, The Rocky Mountain News.

CACI International is a leading provider of professional services and information technology solutions to the federal government.

Operating margin came in at 7.2%, almost flat with the year-ago quarter and 6.7% in the previous quarter. Net income increased 23.0% year over year and 23.9% sequentially to $29.0 million. EPS of 95 cents easily beat the Zacks Consensus Estimate of 92 cents.

For full fiscal 2009, the company reported revenues of $2,730 million, up 12.8% from last year’s total. Organic revenue growth was 9.9%. Net income grew 14.6% year over year to $95.5 million while EPS of $3.14 was a record.

Going forward, management reiterated its prior guidance for fiscal 2010 and expects revenues between $2,850 million and $2,950 million. EPS is anticipated between $3.20 and $3.40.

The current business environment poses uncertainty in the near term. Nevertheless, in the long run, prospects for CACI remain strong. The war on terrorism is a major priority for the federal government. The trend towards outsourcing by the federal government to modernize mission-critical information systems remains robust.

CACI provides the critical IT infrastructure for the Department of Defense (DoD) and the Department of Homeland security. National security continues to be the prime concern for the government, which is feeling the continued demand for the company’s services to keep the nation safe by implementing efficient and cost-effective IT solutions to modernize federal agencies.

CACI competes primarily in the government IT services arena, which, like other government sectors, consists of many competitors of various sizes. All key rivals of the company, like Computer Sciences Corp. (CSC), Digital Net (DNET) and Dynamics Research (DRCO), have their respective strengths. In particular, we believe the company is favorably positioned, given its good relationship with the DoD and its strong position in terms of proposals.

Moreover, management plans to expand its operations in healthcare, logistics, IT modernization along with addressing new opportunities in cyber security, smart power and energy.

Company Description

Syntel Inc. provides information technology and knowledge process outsourcing services worldwide. In describing its business, the company explains that it delivers flexible, custom Information Technology and Business Process outsourcing solutions that improve quality and reduce costs. Syntel serves the financial services, healthcare, insurance, automotive and retail industries among others.

Robust Results

The company recently posted second-quarter earnings of 61 cents per share, eclipsing the previous year's 42 cents and exceeding the Zacks Consensus Estimate by 20%. Revenue slipped 3% year-over-year.

Management said it was encouraged by improved stabilization in the marketplace and the increasingly positive discussions initiated with clients during the quarter, adding that while discretionary projects remain sidelined, customers are beginning to once again look at cost reduction initiatives which are aligned with their longer-term strategic objectives.

The company noted that the timing of new project starts and changes in the marketplace are uncertain going forward. Syntel believes that the second quarter revenue run-rate represents a minimum level for the balance of 2009. The company plans to continue focusing on driving key investment initiatives and proactive cost management in the second half of the year with the objective of properly positioning the company for long-term sustainable growth.

Syntel has fared well against the broader market, beating it by about 40% over the past year.

Higher Forecasts

Syntel updated its earnings guidance, calling for a range of $2.40 to $2.50 per share.

The full-year Zacks Consensus Estimate climbed from $2.20 to $2.41 per share over the past month. For 2010, the Zacks Consensus Estimate stands at $2.39, versus last month's $2.11.

Strong Industry Comparisons

The technology services player has a return on equity (ROE) of 40%, more than doubling the industry-average of 14%. The company boasts a solid balance sheet, showing no debt. Its net profit margin of 25% is well above the industry average of 5%. Syntel's dividend yield of 1% is above the industry average and translates into an annual dividend of 24 cents per share. Zacks Investment Research

The new manufacturing portfolio includes a series of plant-wide energy optimization tools that create an integrated industrial energy management system based on Rockwell Automation industrial automation and information technology. It also will allow manufacturers to perform real-time load-balancing of their industrial processes, bring renewable energy sources online and execute demand response strategies connected to the Smart Grid.
 
Rockwell is well-positioned for long-term growth based on its strong global market presence. However, we remain cautious due to the lack of near-term visibility. The company’s revenues depend on the level of global or regional industrial production and the financial performance of its user industries.
 
All matured markets are expected to witness a negative GDP growth in the near term. There has been a slowdown in industrial equipment spending in the last few quarters, which is not expected to recover in the near term. This is adversely impacting Rockwell’s revenues. We expect the uncertainty in the global economy to continue for the rest of fiscal 2009, which increases the possibility of capex cuts by Rockwell customers.
 
Another concern is the recent dramatic strengthening of the U.S. dollar. Rockwell’s top-line will be hampered further if the rates stay at current levels. Management expects currency translation to have a negative impact of 7% on revenues for the current fiscal year. Thus, we rate the shares of Rockwell as Underperform.

Chicago, IL – August 7, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Salesforce.com (CRM), Wal-Mart (WMT), Dell Inc. (DELL), Google Inc. (GOOG) and Microsoft Corporation (MSFT).

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Here are highlights from Thursday’s Analyst Blog:

CRM Focuses on Healthcare

Healthcare provides a good business opportunity to information technology companies, a fact reinforced by Salesforce.com (CRM). The company is investing in Practice Fusion, which is involved in the business of electronic health records, health policy, health information technology and consumer medical data topics. Salesforce.com will invest around $10.0 million for a marginal stake in the company, which will generate around $1.0 million of revenue a year for the company.

The cloud computing model introduced by Salesforce.com, uses online software solutions created by it. We believe that the advantages of the model are particularly applicable to the company’s clientele. In addition to the user-friendly interface, cloud computing typically lowers IT staff requirements. So medical practitioners and other professionals who prefer to manage the system on their own will find it particularly useful.

Under the new agreement, Practice Fusion’s EMR (electronic medical records product line) will be combined with Salesforce.com’s cloud computing system to enhance value for customers. We think the deal comes at an opportune moment because the federal government passed a bill earlier this year, including around $30.0 billion in incentives to medical practitioners and hospitals for buying and using electronic record keeping software. We believe this is likely to generate additional business for companies such as Salesforce.com, as most doctors currently use hard copies of medical records.

Wal-Mart (WMT) is also trying to enter this segment, through collaboration with Dell Inc. (DELL). Other big companies such as Google Inc. (GOOG) and Microsoft Corporation (MSFT) have launched personal health records storage systems, which are helping patients to store their own health data. We believe electronic health records provide significant business opportunities, as healthcare professionals are increasingly adopting the concept of a paperless office and recognizing the benefits. We believe that growth in this segment is inevitable, as electronic records becoming accessible from anywhere and at any time makes life easy for both doctors and patients.

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Headquartered in Teaneck, New Jersey, Cognizant is a leading provider of information technology, consulting and business process outsourcing services for Fortune 1000 customers.

GAAP operating margin came in at 19.5% compared to 17.5% in the year-ago quarter. Excluding stock based compensation expense of $8.4 million and stock-based Indian fringe benefit tax expense of $1.3 million, non-GAAP operating margin was 20.8%, above the company's targeted range of 19% -20%.

GAAP EPS came in at $0.47 compared to $0.35 in the previous quarter. Non-GAAP EPS (excluding stock based compensation and stock-based Indian fringe benefit tax expense) came in at $0.50 easily beating the Zacks consensus of $0.37.

Based on a strong first half, Cognizant upgraded its guidance for 2009. Though the management remains cautions about the macroeconomic environment, visibility and confidence in the demand environment have strengthened over the past two months.

Nevertheless, demand for global IT and business services have stabilized with clients moving forward on their scheduled projects, especially those that help streamline their businesses and reduce operational costs. However, management is not expecting any surge in growth or a strong recovery in demand this year.

Management now expects 2009 revenue to grow by at least 11.5% to $3.14 billion, up from the previous guidance of 10%. Non-GAAP EPS is projected at $1.80.

For fiscal third quarter, Cognizant expects revenue of at least $800 million. Non-GAAP EPS is projected at $0.44.

Compared to its competitors, Cognizant is setting a more robust tone going forward. Earlier, peers like Tata Consultancy Services Ltd. and Infosys Technologies Ltd. (INFY) posted strong quarterly results but maintained a cautious outlook. Infosys raised its annual guidance marginally and saw a recovery in IT spending only by mid-2010.

Cognizant continues to outperform its peers and remains a leader in IT services. The stock has gained almost 70% in the past six months. We maintain our Hold on Cognizant.

Shares are up more than 7% at the moment, which makes UIS a top-performing Zacks #1 Rank company. Volume is about 15.7 million shares, more than double the daily average of about 5.7 million.

UIS is a worldwide information technology company with a portfolio of IT services, software and technology. It specializes in helping clients secure their operations, increase the efficiency and utilization of their data centers, enhance support to their end users and constituents and modernize their enterprise applications.

Earnings Estimates Soar Higher

At the moment, the Zacks Consensus Estimate for this year and next is 8 cents per share and 20 cents per share, respectively. Those are stark improvements from the outlooks 3 months back; analysts were calling for a loss of 4 cents for this year and a profit of 7 cents for next.

Furthermore, those expectations suggest profit growth of 150% next year over this year.

However, even more interesting is the improvement in guidance over the past 7 days. This year's estimate has gained 700% in that time from a 1-cent profit prediction. Meanwhile, next year's advance has been 54% in the past week from 13 cents.

Second Quarter Report

Although revenue declined by 16%, UIS reported second-quarter earnings per share of 10 cents last week. That result handily topped the Zacks Consensus Estimate of a penny loss by as much as 1100%. In the year-ago quarter, UIS lost 4 cents.

The company said this advance was driven by its ongoing actions to more effectively concentrate its resources and reduce its cost base.

"While we have much more work to do, this is an important step toward our goal of becoming a consistently and predictably profitable company," said Chairman and CEO Ed Coleman.

The Computer Services Industry

UIS is 1 of 6 companies from the Computer-Services industry on today's Zacks #1 Rank List, which includes 234 stocks. Those other companies are CGI Group, Inc. (GIB), Dynamics Research Corporation (DRCO), Patni Computer Systems Ltd. (PTI), SYNNEX Corporation (SNX) and Syntel, Inc. (SYNT).

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Company Description

Strayer Education provides higher education for working adults, offering undergraduate and graduate degree programs in business administration, accounting, information technology, education, health care and public administration to approximately 46,000 working adult students at 71 campuses in 15 states and Washington, D.C. and worldwide via the Internet.

Robust Earnings

The company recently posted second-quarter earnings of $2.00 per share, topping the previous year's $1.50 and exceeding the Zacks Consensus Estimate by 2%. Revenues jumped 29% year-over-year to $125.9 million thanks to a boost in enrollment and a 5% rise in tuition.

Summer enrollment was up 24% to 42,516 students, versus the year-prior 34,176 students.

The company stated that it will open 4 new campuses in preparation for the fall term. The 4 campuses, in addition to the 7 that opened earlier this year, will complete the Strayer's planned 11 openings in 2009.

Bullish Projections

The solid summer enrollment figures led to Strayer forecasting a third-quarter earnings range of $1.14 to $1.16 per share.

In response, the Zacks Consensus Estimate for the third quarter shot up to $1.16 per share from last week's $1.05.

For the current full year, the Zacks Consensus Estimate of $7.44 per share was increased from $7.27 over the past week.

For 2010, the Zacks Consensus Estimate stands at $9.16 per share, up from last week's $8.88.

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