We maintain our outperform rating on
American Public Education
) based on the company's strong fundamentals and
better-than-expected third-quarter 2011 results.
The healthy results came on the heels of robust student
enrollments and the company has predicted a growth of 29% in new
student enrollments for the fourth quarter. It comes as a surprise
as another for-profit education company,
Capella Education Company
) cautioned that new enrollment in fourth-quarter 2011 is expected
to tumble by approximately 10%.
American Public Education is well positioned in the online post
secondary education industry due to its focus on recruits serving
the U.S.military as well as public service personnel. Moreover, the
company's part-time programs are well suited to irregular and
extended work schedules of these personnel, who travel and relocate
frequently and have limited financial resources. This provides a
significant upside potential for the company.
The quarterly earnings of 60 cents a share beat the Zacks
Consensus Estimate of 42 cents, and rose twofold from 30 cents
earned in the prior-year quarter.
Management now projects fourth-quarter 2011 earnings between 58
cents and 60 cents a share that dovetails with the Zacks Consensus
Estimate of 59 cents.
Total revenue of $65.3 million, surged 35% from the prior-year
quarter, and also came ahead of the Zacks Consensus Estimate of $63
million. American Public Education forecast a revenue growth of
approximately 29% for the fourth quarter of 2011.
Facts for Shareholders
American Public Education has witnessed an impressive revenue
growth over the last four fiscal years. During 2007-2010, revenue
surged from $69.1 million to $198.2 million, recording a compound
annual growth rate of 42% driven by high student satisfaction and
referral rates, regional accreditation, and access to Title IV
programs. Furthermore, management expects revenue to rise
approximately 29% in fourth-quarter 2011.
The company's sustained effort to expand educational programs
helps it to boost enrollments. Net course registrations rose 32%
and net course registrations from new students climbed 53% in
third-quarter 2011. Management forecasted net course registrations
to rise approximately 28%, and net course registrations from new
students to jump approximately 29% in fourth-quarter 2011.
Further, American Public Education has a healthy debt-free
balance sheet, with cash and cash equivalents of $107.3 million at
the end of third-quarter 2011. This offers the company financial
flexibility to drive future growth.
American Public Education's focus on serving military and public
service personnel, high student referral rates and accreditation
enable it to consistently deliver impressive top and bottom
The company is now primarily focusing on increasing net
registrations from civilian students, to safeguard itself from the
adverse impact of a fall in military registrations due to increased
Currently, we maintain our long-term Outperform recommendation
on the stock. Moreover, American Public holds a Zacks #3 Rank that
translates into a short-term Hold rating.
AMER PUB EDUCAT (
): Free Stock Analysis Report
CAPELLA EDUCATN (
): Free Stock Analysis Report