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


Apollo Education beat the Zacks Consensus Estimate for both earnings and revenues in the third quarter of fiscal 2014. However, earnings of $0.61 per share declined 27.6% year over year as a relatively better top-line performance was offset by weaker margins. Revenues declined 15.5% due to enrollment shortfall. Apollo Education's enrollment trends have remained weak for several quarters now due to lower demand and competitive pressures. Encouragingly, however, starts improved sequentially in all the three quarters of 2014. Moreover, Apollo's accelerated efforts to right-size its business through significant layoffs and campus closings gives competitive advantage. Also, growth enhancing investments, innovation and recent price cuts should improve student value proposition and retention rates. Though we believe these turnaround efforts should eventually improve enrollment trends and boost margins, enrollments are unlikely to return to positive growth in the near future.


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 40 years. Apollo Group offers innovative and distinctive educational programs and services for undergraduate, masters and doctoral levels, both online and on-campus. These programs are offered through the company's subsidiaries.

Apollo Group reports its operating results under the following segments:

University of Phoenix (UOP) It is the flagship segment (represents about 90% of revenues) and offers bachelor's, masters and doctoral programs through its campuses and learning centers spread across the U.S. including the Commonwealth of Puerto Rico. However, the majority of University of Phoenix students study exclusively 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 90% of the company's total revenue in fiscal 2013.

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 Mexico (ULA). Apollo Global also includes, Indian Education Services Private Ltd., a joint venture with Indian media company, HT Media Limited, to offer educational services and programs 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 also accredited by HLC in the U.S.), Institute of Professional Development (IPD) and The College for Financial Planning Institutes Corporation, Inc (CFFP) (also accredited by HLC). 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).

During the first quarter of fiscal year 2014, Apollo Group changed its name from Apollo Group, Inc. to Apollo Education Group, Inc.

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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.

This article appears in: Investing , Stocks

Referenced Stocks: APOL , IPD



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