American Public Education, Inc.
) second quarter 2013 earnings of 60 cents per share beat the
Zacks Consensus Estimate of 58 cents by 3.5%. Earnings exceeded
management's expected range of 53 cents to 58 cents a share.
Earnings increased 17.6% year over year on the back of top-line
The company's investments in information technology
infrastructure to support a larger and more diverse student
population, automation of the 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 9% year on year to $80.9 million, missing the
company's expected range of approximately 10% to 13% growth.
Revenues also missed the Zacks Consensus Estimate of $83.0
million by 2.5%. The lower than expected top-line increase was
due to lesser than expected increase in total student enrollment.
Total enrollment increased 7% year over year to 99,500, lower
than the company's guidance of 9% - 12% increase. Total
enrollment results due to temporary suspension of new enrollments
in the Department of Defense voluntary education Tuition
Assistance programs in March and April 2013. New student
enrollments declined 9% to 17,900, better than management's
guided range of 10% to 14% 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
Operating income for the quarter increased 14.7% to $17.2
million, due to increase in revenue. Selling and promotional
expenses increased 11.0% from the prior-year period to $16.1
million due to American Public's increased marketing efforts.
Third-Quarter 2013 Outlook
For the third quarter of 2013, American Public expects revenue
growth to be flat to up 4%. Management also expects third quarter
2013 total enrollments to remain flat year over year. New student
enrollments are expected to decline in the range of 11% to 15%.
Management further projects third quarter 2013 earnings between
52 cents and 56 cents a share, which marks a year-over-year
decline of 7%-13%.
American Public carries a Zacks Rank #3 (Hold).
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), all carrying a Zacks Rank #2 (Buy).
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