American Public Education
) recently announced a new share repurchase program. The board of
directors of the online education provider has authorized a
purchase of the company's common stock worth upto $20 million. The
company's shares outstanding stood at approximately 18.2 million as
of March 31, 2012.
The students enrolled in American Public Education courses
primarily serve the military and public service communities.They
mainly finance their education through tuition assistance programs
of the US Armed Forces (DoD tuition assistance programs), education
benefits administered by the Department of Veterans Affairs and
federal student financial programs referred to as Title IV
American Public Education announced its first quarter results
last week. The company recorded earnings of 50 cents per share in
the first quarter of 2012, beating the Zacks Consensus Estimate by
2 cents and the prior-year figure by 7 cents due to top-line
growth. Total revenue of $75.7 million was up 29% from the
prior-year quarter, slightly above management's expectation of
growth of approximately 27% for the said quarter. Revenues also
edged past the Zacks Consensus Estimate of $75.0 million. The
top-line growth was driven by brisk student enrollments,
particularly from civilian, military, and veteran students.
However, the company provided a gloomy outlook for the second
quarter with new enrollment growth projections representing a sharp
decline from first quarter levels. Management commented that steps
taken to reduce student abuse of Title IV funds could result in
lower new student enrollments in the second quarter.
We currently have a Neutral recommendation on American Public
Education. The stock carries a Zacks #3 Rank in the near term
We believe American Public Education's affordable tuition costs
and its shifting of student focus to the civilian market bode well
for long-term growth. However, the focus on civilian growth as well
as initiatives to curb fund abuse will be a headwind for margins.
Moreover, uncertain military enrollment growth due to possible
changes to the DoD tuition assistance programs also concerns us. We
therefore prefer to remain on the sidelines and maintain a Neutral
AMER PUB EDUCAT (APEI): Free Stock Analysis
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