American Public Education, Inc.
) 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
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
WebMD Health Corp.
) carrying a Zacks Rank #1 (Strong Buy), and
Giant Interactive Group, Inc.
Perion Network Ltd
) carrying a Zacks Rank #2 (Buy).
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