Apollo Group Inc.
) recently announced that the accreditation for its flagship
university, University of Phoenix (UOP), was renewed. While the
renewal cleared a major overhang for this private education
service provider, it also pushed up Apollo's share price slightly
higher. The University accounts for more than 90% of Apollo's
In February this year, the Higher Learning Commission's (HLC)
peer review team recommended that UOP be put on probationary
status as it had concerns regarding the latter's administrative
and governance structure. However, later in May, an HLC advisory
panel, acting on the review team's report, recommended that UOP's
accreditation be renewed and the University be placed on notice
status for two years. The advisory panel's recommendation was
based on the evidence of governance changes and new information
submitted by UOP.
Going with the advisory panel's recommendation, on Jul 9, HLC
re-affirmed UOP's accreditation through the 2022-2023 academic
year and also placed the University on notice status for a
two-year period. The UOP will now have to submit a Notice Report
by fall 2014, providing evidence that it meets all standards for
accreditation. Apollo's another subsidiary, Western International
University, also received a similar notice from the HLC.
Losing the HLC accreditation would have hurt UOP's right to
operate in certain states and participate in the Title IV
programs, thus hurting its business considerably. A significant
percentage of the company's students rely on the loans included
in the Title IV programs as they are offered at below-market
interest rates by the Department of Education. Employers, other
higher education institutions and governmental entities might not
have recognized the degrees and credits earned by UOP students
had the university lost the accreditation.
Apollo carries a Zacks Rank #3 (Hold). It reported mixed
fiscal third-quarter results last month, beating the Zacks
Consensus Estimate for earnings but missing the same for revenues
due to persistent weak enrollment growth at the UOP.
Other education companies worth a look are
New Oriental Education & Technology Group
), all carrying a Zacks Rank #1 (Strong Buy).
APOLLO GROUP (APOL): Free Stock Analysis
ATA INC-ADR (ATAI): Free Stock Analysis
NEW ORIENTAL ED (EDU): Free Stock Analysis
K12 INC (LRN): Free Stock Analysis Report
To read this article on Zacks.com click here.