On Jun 20, 2014, we issued an updated research report on
American Public Education, Inc.
On May 8, this online higher education provider reported
better-than-expected results in the first quarter of 2014. Apart
from surpassing the Zacks Consensus Estimate for both earnings and
revenue in the quarter, first-quarter 2014 results exceeded the
American Public's first-quarter earnings of 59 cents per share
crushed the Zacks Consensus Estimate and management's expected
range of 43 cents to 48 cents by a wide margin. Earnings beat
expectations despite a year-over-year decline attributable to lower
marketing expenses, cost savings and efficiencies and the company's
efforts to reduce unnecessary spending.
Revenue surpassed the Zacks Consensus Estimate and management's
expected range of flat to an increase of 3%. Total revenue of $88.6
million increased 6% year on year. We believe the top-line beat was
only due to the inclusion of $7.2 million of sales from Hondros
against the absence of any such revenues last year. However,
revenues continued to decline at APUS, down around 3% this quarter
to $81.3 million due to weak enrollment trends.
The company has been witnessing declining enrollment levels for the
past few quarters due to continued volatility and softness in
military enrollments and uncertainty related to Tuition Assistance
programs. However, a 4% decline in total enrollment in first
quarter 2014 was narrower than management's expectation of 5% to 7%
decline. New student enrollments (student starts) declined 8%,
within management's expectation of 7% to 9% decline.
However, the company provided a weak outlook for the second
quarter. Management expects continued military enrollment hurdles
in the second quarter of 2014. Management warned that
second-quarter 2014 total enrollments would decline in the range of
2% to 5% while student starts are expected to go down in the range
of 4% to 7%. American Public expects revenues to increase in the
range of 3-5%. Management further projects second-quarter 2014
earnings between 43 cents to 50 cents. Management also stated that
new student enrollments at Hondros decreased approximately 10% in
American Public Education carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some better-ranked stocks in the education sector include
Lincoln Educational Services Corporation
DeVry Education Group Inc.
Strayer Education Inc.
). While Lincoln Educational Services sports a Zacks Rank #1, DeVry
Education and Strayer Education carry a Zacks Rank #2 (Buy).
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AMER PUB EDUCAT (APEI): Free Stock Analysis
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