We are upgrading Capella Education to Outperform from Neutral on solid third quarter 2014 results backed by a better-than-expected increase in total enrollment and strong margins. Encouraged by the performance, the company also provided a positive guidance for the upcoming quarter. Capella's third-quarter 2014 earnings of $0.62 per share beat the Zacks Consensus Estimate by 12.7% and rose 29.2% year over year owing to solid revenues. Surpassing the company's expectation of 1% to 2% increase, revenues of $103.1 million increased 2.4% year over year and beat the consensus mark by 1.1% on the back of an increase in enrollment and higher tuition fees. Total enrollment rebounded during the quarter. New enrollments rose 11.9% year over year due to increases across all programs, particularly in Master's program.
Founded in 1991 and headquartered in Minneapolis, MN, Capella Education Company (CPLA), through its wholly owned subsidiary, Capella University, provides online post-secondary education services in the United States, focused primarily on working adults. In addition, the company imparts online education through other wholly owned subsidiaries such as Resource Development International Ltd. (RDI), Capella Learning Solutions (CLS) and Sophia Learning LLC (Sophia). RDI was acquired in the third quarter of 2011 and is an online provider of U.K. University distance learning courses. Sophia Learning, acquired in Apr 2012, is a social education company. CLS offers online training solutions and services to corporate partners.
The company provides doctoral, master's and bachelor's programs in the fields of public service leadership, behavioral health and human services, business management and technology, and education. As of Sep 30, 2014, Capella University offered 43 graduate and undergraduate degree programs with 142 specializations. The university is accredited by The Higher Learning Commission (HLC) of the North Central Association of Colleges and Schools and registered with the Minnesota Office of Higher Education. Its courses are eligible for federal Title IV financial aid.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.