Capella Education Co. (CPLA) - Bear of the Day

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Though Capella Education Co's ( CPLA ) first quarter 2012 earnings of $0.82 per share beat the Zacks Consensus Estimate, it dropped 15% from the prior-year quarter due to top-line weakness. Total revenues fell 1.8% due to a decline in new enrollments.

The company has been witnessing volatile enrollment growth since the last few quarters due to challenging market conditions. The company's brand-driven marketing strategy is not leading to a desired improvement in enrollments. Increased marketing spend associated with the strategy also remains a drag on margins.

The company provided a weak near-term enrollment outlook, forcing us to reduce our estimates for both 2012 and 2013. Moreover, the highly regulated nature of post-secondary education in the US also remains a consistent overhang. We have therefore downgraded our rating on the stock from Neutral to Underperform.
 
CAPELLA EDUCATN (CPLA): Free Stock Analysis Report
 
CAPELLA EDUCATN (CPLA): Free Stock Analysis Report
 
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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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