American Public Beats Estimate - Analyst Blog
August 03 2011 - 9:45AM
Zacks
American Public Education
Inc. (APEI), an online provider of
higher education to military and public service communities,
recently delivered better-than-expected second-quarter 2011 results
on the heels of robust student enrollment. The quarterly earnings
of 49 cents a share beat the Zacks Consensus Estimate of 45 cents,
and rose approximately 32% from 37 cents in the prior-year
quarter.
Management now projects
third-quarter 2011 earnings between 41 cents and 43 cents a share
that dovetails with the current Zacks Consensus Estimate of 42
cents.
Total revenue came in at
$60.8 million compared with the Zacks Consensus Estimate of $60
million, and soared 31% from the prior-year quarter. American
Public Education forecast revenue growth of approximately 29% for
third-quarter 2011.
Total net course
registration surged 28% to approximately 77,900, and net course
registrations from new students grew 39% to approximately 18,900.
American Public stated that about 96,800 students were enrolled in
the American Public University System as of June 30, 2011,
reflecting an increase of 34%.
Management now expects
third-quarter 2011 net course registrations to jump approximately
28%, and net course registrations from new students to rise
approximately 35%.
American Public Education
has predicted a growth in student enrollment for the third quarter,
despite the regulation proposed by the Department of Education that
may weigh upon students’ enrollment and the company’s
profits.
The Department of Education
cited that an educational program could qualify for Title IV funds
only if it helps in achieving gainful employment, which includes
the criteria of loan repayment rate and debt-to-income ratios. The
company derives a major portion of its revenues from federal
student financial aid programs, the Title IV programs. The
education institutions are also under the scanner due to the rise
in the default rate of student loans.
A for-profit education
company, Capella Education
Company (CPLA) cautioned that new
enrollment in third-quarter 2011 is expected to tumble by
approximately 30%. To counter sluggishness in students’ enrollment,
education companies are restructuring their cost base.
Going back to American
Public Education, operating income for the quarter under review
surged 27% to $14.9 million, but operating margin contracted 90
basis points to 24.5%.
American Public Education
ended the quarter with cash and cash equivalents of $94.5 million,
and no long-term debt. For the first six months ended June 30,
2011, capital expenditures were $6.8 million and cash from
operations was $25.7 million.
Currently, we have a
long-term “Neutral” rating on the stock. Moreover, American Public,
which competes with Apollo Group
Inc. (APOL), holds a Zacks #2 Rank,
which translates into a short-term ‘Buy’ rating.
AMER PUB EDUCAT (APEI): Free Stock Analysis Report
APOLLO GROUP (APOL): Free Stock Analysis Report
CAPELLA EDUCATN (CPLA): Free Stock Analysis Report
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