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Capella Education FlexPath Strong, Doctoral Enrollment Down

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On May 19, we issued an updated research report on Capella Education CompanyCPLA - an online post-secondary education service provider in the U.S., primarily focused on working adults.

Capella Education's investments in marketing, efforts to enhance relationship with employers and expansion of FlexPath offerings are encouraging. However, an improving employment scenario lowers demand for Capella Education's courses.

Q1 Highlights

Capella Education recently reported first-quarter of 2017 earnings surpassed the Zacks Consensus Estimate by 8.1% and increased 9.3% year over year.

Revenues also increased 6% from the year-ago level owing to the strong performance of the post-secondary segment and substantial revenue growth at the job-ready skill segment owing to the acquisitions of Hackbright and DevMountain.

Capella University's total active enrollment rose 8% to 38,802 learners, while new enrollment increased 3.6% on a year-over-year basis

Major Positives

We are encouraged by FlexPath's continued success which continues to be one of the company's fastest growing programs. The company intends to introduce additional FlexPath programs, including the development of the next generation FlexPath in 2017. Total FlexPath enrollment during the first quarter was 14% of total Bachelors and Masters enrollment.

Capella Education's investments in marketing, efforts to enhance relationship with the employers and expansion of FlexPath offerings are encouraging. The company's WORKFORCE EDGE program is likely to contribute significantly to new enrolment growth in 2017.

Also, Capella Education's shares have gained over 68.8% in the last one year, outpacing 58.9% growth for the Zacks categorized Schools industry. Moreover, the company's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 11.6%.

Adverse Factors

As the employment situation is improving, more adult students are opting for jobs and the demand for academic programs are declining. There is reluctance among students to enroll in academic programs and take loans to fund them.

We are also concerned about the declining enrollment trends at the company's doctoral programs. Doctoral enrollment decreased 5.4% to 9,326 in the first quarter of 2017.

Zacks Rank & Stocks to Consider

Capella Education currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Consumer Discretionary sector are Bridgepoint Education, Inc. BPI , Bright Horizons Family Solutions Inc. BFAM and Wynn Resorts, Limited WYNN .

Bridgepoint Education and Wynn Resorts sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Full-year 2017 earnings for Bridgepoint Education are expected to increase 263.9%.

Bright Horizons, a Zacks Rank #2 (Buy) stock, is expected to witness 20.4% growth in 2017 earnings.

Wynn Resorts is likely to see a 36.2% rise in 2017 earnings.

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Wynn Resorts, Limited (WYNN): 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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