Apollo Education Group, Inc. (APOL): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Apollo Education's first-quarter 2015 earnings of $0.44 per share beat the Zacks Consensus Estimate by 7%. However, earnings declined 58.1% year over year due to worse than expected revenues and profits and higher taxes. Revenue of $719.1 million missed the estimates by 1.2%, and declined 15.2% year over year due to lower enrollments at the University of Phoenix. University of Phoenix's enrollments have declined since 2010 due to lower demand and competitive pressures. As such, based on the soft business trends in the first quarter of fiscal 2015, the company also has cut revenue and operating income guidance for 2015. However, encouragingly the rate of decline in starts has improved at a steady level throughout 2014 and first quarter 2015. Also, continued improvement in Apollo Global revenues is commendable. We prefer to remain on the sidelines, till improvement in starts offsets other headwinds.


Overview:

Based in Phoenix, AZ, Apollo Education Group, Inc. (APOL) is a leading private education service provider in the U.S. and has been in the education business for more than 40 years. Apollo Education offers undergraduate, graduate, professional development and other non-degree educational programs and services, both online and on-campus. These programs are offered through the company's subsidiaries.

Apollo Education reports its operating results under the following segments:

University of Phoenix (UOP) It is the flagship segment that offers undergraduate and graduate degrees in many programs including business, education and nursing through its eight colleges. The University has a ground campus network of 110 locations throughout the U.S. and Puerto Rico. However, the majority of UOP students study online. The University has been accredited by The Higher Learning Commission (HLC) of the North Central Association of Colleges and Schools and also holds other programmatic accreditations. UOP accounted for 87% of the company's total fiscal 2014 revenue.

Apollo Global - Apollo Global aims to make investments in international education market. Apollo Global, Inc. includes revenues from the largest Apollo global subsidiary, BPP Holdings plc, a U.K.-based company which provides education and training to legal and finance professionals. BPP Holdings was acquired by Apollo Global in Jul 2009. This segment also includes revenues from other subsidiaries of Apollo Global in Chile (UNIACC and IACC) and Mexico (ULA). Apollo Global also includes, Indian Education Services Private Ltd., a joint venture with Indian media company, HT Media Limited, to build Bridge School of Management in India. The newest additions to Apollo Global segment are Open Colleges in Australia, acquired in Dec 2013 and Milpark Education in South Africa, acquired in May 2014.

Other The Other segment includes revenues from Western International University (WIU) and The College for Financial Planning Institutes Corporation, Inc (CFFP) (both accredited by HLC in the U.S.) The segment also includes Carnegie Learning (a publisher of research-based math curricula and adaptive learning software acquired in Sep 2011) and Apollo Lightspeed (innovation business unit). In the fourth quarter of fiscal 2014, the company sold the Institute for Professional Development.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




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