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Apollo Education Misses on Q4 Earnings, Enrollment Weak

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Apollo Education Group, Inc. 's APOL adjusted earnings of 17 cents per share in the fourth quarter of fiscal 2015 missed the Zacks Consensus Estimate of 18 cents by 5.6%. In addition, earnings were down 50% from 34 cents reported in the year-ago quarter, owing to a weakness in revenues.

Net revenue of $600.3 million lagged the Zacks Consensus Estimate of $625 million by about 4% in the fourth quarter of fiscal 2015. Revenues declined 13.8% from the prior-year quarter as a strong performance at Apollo Global was offset by lower enrollment and new enrollments at University of Phoenix. Revenue per student increased 0.9% year over year.

Adjusted operating income came in at $55.3 million, lower than $94.1 million reported in the prior-year quarter.

Segment Details

University of Phoenix (UOP) revenues declined 17.2% year over year to $507 million at the UOP owing to lower enrollment and new enrollments. Net revenue was also drained by increased use of discounts, grants and scholarships.

UOP reported an 18.3% decline in total enrollment to 190,700. New enrollment or starts at the UOP declined 31.3% year over year to 26,500.

UOP's enrollments have been sluggish for many quarters due to regulatory challenges, and changes and competition in the higher education industry.

Apollo Global reported net revenue of $85.4 million, up 9.8% year over year. The segment has been benefiting from higher revenues from its recent acquisitions.

Other Schools reported revenues of $7.9 million in the fourth quarter of fiscal 2015, up 31.7% year over year.

Fiscal 2015

Adjusted earnings of $1.10 per share in the fiscal 2015 surpassed the Zacks Consensus Estimate of $1.05 by 4.8%. However, earnings were down 56.9% from $2.55 reported in the year-ago owing to weakness in revenues.

Net revenue of $2.57 billion lagged the Zacks Consensus Estimate of $2.60 billion by 1.2% and fell short of the company's expected range of $2.60 billion to $2.62 billion. Revenues declined 14% from the prior year as strong growth at Apollo Global was offset by a poor performance at UOP.

2016 Outlook

Apollo Education expects net revenue of $2.18 billion to $2.23 billion in fiscal 2016. Adjusted operating income is expected to range between $115 million to $140 million.

Apollo Education Group carries a Zacks Rank #2 (Buy).

Other well-ranked stocks in the consumer discretionary sector include New Oriental Education & Technology Group Inc. EDU , Bridgepoint Education, Inc. BPI and Boyd Gaming Corporation BYD . While New Oriental Education & Technology Group sports a Zacks Rank #1 (Strong Buy), Bridgepoint Education and Boyd Gaming Corporation hold a Zacks Rank #2.

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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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