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Apollo Education (APOL) Posts Q4 Earnings, Enrollment Soft

Shares of post-secondary education company Apollo Education Group, Inc.APOL rallied over 3.18% in afterhours trading on Oct 20 after the release of its fourth-quarter fiscal 2016 results.

Apollo Education signed an agreement to be acquired by a consortium of investors for about $1.1 billion in Feb 2016. The deal is subject to the necessary closing conditions.

Apollo Education's adjusted earnings (excluding special items) of 21 cents per share in the fourth quarter of fiscal 2016 compared favorably with the Zacks Consensus Estimate of a loss of 5 cents. The bottom line also improved 23.5% year over year from 17 cents.

Fourth-quarter fiscal 2016 net revenue of $492.5 million surpassed the Zacks Consensus Estimate of $465.8 million by 5.7%. Revenues however declined 18% from the prior-year quarter due to lower enrollments.

Adjusted EBITDA was $61.1 million during the quarter, up from $54.1 million in the prior-year quarter.

Segment Details

University of Phoenix ("UOP") revenues declined 25.2% year over year to $379.4 million due to a 25.3% fall in total enrollment to 142,500. New enrollment, or starts, at UOP declined 26.8% year over year to 19,400.

UOP's enrollments have been sluggish for several quarters now due to regulatory challenges, and changes and competition in the higher education industry. The company adopted a transformation strategy for UOP to turn it into a "smaller, but better performing" university. However, the company doesn't expect an improvement in enrollments before fiscal 2019.

Apollo Global reported net revenue of $99.6 million, up 16.6% year over year. Apollo Global continues to expand in international markets, thereby providing support to the top line.

Other Schools reported revenues of $13.6 million in the fourth quarter of fiscal 2016, up 70.7% year over year.

Guidance

Owing to the upcoming merger, Apollo Education Group did not provide any update on its guidance.

Upcoming Peer Releases

Capella Education Co. CPLA will report third-quarter 2016 results on Oct 25.

Strayer Education Inc. STRA is slated to report first-quarter fiscal 2017 results on Oct 26.

DeVry Education Group Inc. DV is expected to report first-quarter fiscal 2017 results on Nov 1.

Capella and Strayer Education hold a Zacks Rank #3 (Hold), while DeVry Education carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

APOLLO GROUP Price, Consensus and EPS Surprise

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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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