American Public Beats Earnings Est. - Analyst Blog
May 10 2013 - 7:50AM
Zacks
American Public Education, Inc.’s (APEI) first
quarter 2013 earnings of 63 cents per share beat the Zacks
Consensus Estimates of 57 cents by 10.5%. Earnings exceeded
management’s expected range of 55 cents to 58 cents a share,
representing year-over-year growth of 10%–16%. Earnings increased
26% year over year on the back of top-line growth.
Investments in information technology infrastructure to support a
larger and more diverse student population, automation of Title IV
processes, and the ePress initiative are manifesting favorable
results. Further, American Public’s fraud prevention initiatives
have been effective in reducing enrollment of students who abuse
funds, thereby reducing bad debt expenses.
Total revenue grew 11% year on year to $83.8 million, within the
company’s expected range of approximately 9% to 13% growth.
However, revenues slightly missed the Zacks Consensus Estimate of
$84.0 million by 0.23%. The year-over-year top-line growth was
driven by brisk student enrollments in the quarter, particularly
civilian, military and veteran students.
Operating income for the quarter increased 22% to $18.2 million.
Selling and promotional expenses increased 28.6% from the
prior-year period to $16.5 million due to American Public’s
increased marketing efforts. As a percentage of revenues, selling
and promotional expenses increased 70 basis points in the
quarter.
Enrollment Growth
Total enrollment increased 9% year over year to 109,700, toward the
higher end of the company’s guidance of 7% – 10% increase. New
student enrollments declined 7% to 19,100, in line with the high
end of management guided range of 5% to 7% decline.
Management believes that the prior-year quarters may have included
enrollment of students who abused student aid. The company’s fraud
prevention initiatives are reducing enrollment of students who
abuse funds, which explains the decline in new student starts for
the quarter.
Second-Quarter 2013 Outlook
For the second quarter of 2013, American Public expects revenue
growth in the range of approximately 10% to 13%. Management also
expects second quarter 2013 enrollments to increase between 9% and
12% over the prior-year period. New student enrollments are
expected to decline in the range of 10% to 14%. Management further
projects second quarter 2013 earnings between 53 cents and 58 cents
a share, which includes a charge of 2 -3 cents related to legal and
financial due diligence expenses.
American Public carries a Zacks Rank #3 (Hold).
Stocks that are currently better positioned and therefore worth
considering include WebMD Health Corp. (WBMD)
carrying a Zacks Rank #1 (Strong Buy), and Giant
Interactive Group, Inc. (GA) and Perion Network
Ltd (PERI) carrying a Zacks Rank #2 (Buy).
AMER PUB EDUCAT (APEI): Free Stock Analysis Report
GIANT INTERACTV (GA): Free Stock Analysis Report
PERION NETWORK (PERI): Get Free Report
WEBMD HEALTH CP (WBMD): Free Stock Analysis Report
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