Markets

American Public (APEI) Down to Strong Sell on Weak Outlook

On Oct 8, Zacks Investment Research downgraded American Public Education, Inc.APEI to a Zacks Rank #5 (Strong Sell).

American Public Education's upcoming results for the third quarter of 2015 should be unimpressive with year-over-year declines projected for most parameters.

Estimates for this post-secondary education provider have gone down after the company issued a weak outlook for the third quarter of 2015 during its last earnings conference call held on Aug 10.

Why the Downgrade?

American Public Education expects its third-quarter 2015 results to continue being impacted by persistent volatility and softness in enrollment by students using Federal Student Aid (FSA) and Tuition Assistance (TA) program. Additionally, the implementation of new admission processes and severe competition in the market place are expected to hurt quarterly enrollment levels as well as earnings per share and revenues.

Management expects third-quarter 2015 total enrollments at American Public University System (APUS) to decrease in the range of 8% to 4%, while new enrollment is expected to decline between 23% and 19% year over year.

American Public expects revenues to decrease between 11% and 7% year over year. Management projects third-quarter 2015 earnings per share between 36 cents and 41 cents, which is much lower than 51 cents reported in the prior-year quarter.

Hondros College, which has been performing well over the past few quarters, is also expected to report lower new enrollment this quarter. Management stated that new student enrollments at Hondros will decrease approximately 6% in third-quarter 2015. Total student enrollment at Hondros is expected to increase about 5%.

This education company's performance in the first half of 2015 was hurt by declining enrollment trends at APUS. Sales and enrollment trends at the school were affected severely by persistent volatility and softness in enrollment by students using FSA. The rate of decline in enrollment too has worsened over the last few quarters. Enrollment of students using FSA has been declining as the company shifted its focus toward improving the quality mix of students. The decline in enrollment of students using FSA was also due to the implementation of new admission processes and intense competition in the market place.

This decline in enrollment of students using FSA has been hurting the company's overall revenues. Unfortunately, it expects this downtrend to continue into the third quarter as well.

Stocks to Consider

Some better-ranked stocks in the for-profit education sector include Strayer Education Inc. STRA , Bridgepoint Education, Inc. BPI and Grand Canyon Education, Inc. LOPE . While Strayer Education sports a Zacks Rank #1 (Strong Buy), Bridgepoint Education and Grand Canyon Education carry a Zacks Rank #2 (Buy).

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AMER PUB EDUCAT (APEI): Free Stock Analysis Report

STRAYER EDUC (STRA): Free Stock Analysis Report

BRIDGEPOINT EDU (BPI): Free Stock Analysis Report

GRAND CANYON ED (LOPE): 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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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