Why Is American Public Education (APEI) Down 8.7% Since Last Earnings Report?

It has been about a month since the last earnings report for American Public Education (APEI). Shares have lost about 8.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is American Public Education due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

American Public's Q4 Earnings & Revenues Beat

American Public Education, Inc. delivered strong earnings in fourth-quarter 2023. The top and bottom lines handily surpassed the Zacks Consensus Estimate on the back of contributions from the APUS and HCN segments.

Delving Deeper

The company reported adjusted earnings per share of 64 cents, which beat the consensus mark of 14 cents by a whopping 357.1%. In the year-ago period, the company incurred a loss of 35 cents per share.

Total revenues of $152.8 million topped the consensus mark of $151 million by 1.5% and inched up 0.2% from the year-ago period. Solid performances of the APUS and HCN segments led to the increase. The upside was partially offset by the lower contributions from the RU segment and the GSUSA unit.

Total costs and expenses decreased 10.4% year over year to $136.9 million. The decline was due to advertising, depreciation and amortization, employee compensation and Collegis transition costs. Adjusted EBITDA increased 66.9% year over year to $25.7 million. Adjusted EBITDA margin of 16.8% expanded 670 bps year over year.

Segment Discussion

APUS: Revenues of $79.4 million rose 8.1% from the year-ago period. The increase was primarily due to a 4% increase in net course registrations. The rise in APUS Segment revenues was chiefly driven by a 4% uptick in net course registrations, coupled with tuition and fee hikes introduced during the second and third quarters of 2023. APUS’ total net course registration increased 4% from a year ago to 90,700. APUS' military prowess has led to a 5% increase in active-duty registrations, while veteran enrollments demonstrate sustained momentum with a remarkable 13% year-over-year growth. This underscores the robust military legacy AMU has established. Adjusted EBITDA margin expanded to 35% from 28% a year ago.

RU: The segment reported revenues of $52.6 million for the quarter, down 13.4% from a year ago. This was due to a 9.6% fall in total student enrollment, partially offset by increases in the tuition of certain programs implemented in January 2023. RU’s total student enrollment fell to 14,100. In the quarter, RU’s EBITDA swung to positive territory, totaling $0.4 million against a loss in the year-ago quarter. This improvement was attributed to reduced advertising expenses and labor savings resulting from previous workforce reductions.

HCN: Segment’s revenues rose 24.9% year over year to $15.8 million. The increase was backed by growth in total student enrollment and tuition fees. Total student enrollment at HCN increased 19.2% from the prior-year quarter’s levels to 3,100. During the quarter, Hondros attained a positive EBITDA of $1.1 million, contrasting with an EBITDA loss of $0.7 million in the corresponding quarter of the previous year.

GSUSA revenues decreased 10.3% year over year to $5.1 million due to lower enrollments in the quarter.

2023 Highlights

Total revenues came in at $600.5 million, down from $606.3 million in 2022. In 2023, loss per share was $2.93, which is narrower than the year-ago loss of $6.08 per share.

Financials

At the end of 2023, American Public had total cash, cash equivalents, and restricted cash of $144.3 million, up from $129.6 million at 2022-end. Adjusted EBITDA was $59.6 million in 2023, up from $56.7 million in 2022.

Q1 Guidance

APEI expects total revenues to grow 1-2% year over year to $151-$153 million. The company anticipates adjusted loss in the range of 25-17 cents per share. Adjusted EBITDA is expected to be in the range of $8-$10 million, suggesting growth of 14-43% year over year.

APUS’ total net course registrations are likely to be in the range of 97,000-99,000, reflecting growth of 1-3% year over year. HCN’s total enrollment is expected to increase 22% from the prior year’s figure to 3,300 students. RU’s student enrollment will likely fall 6% from the year-ago quarter’s figure to 13,500. Within RU, on-ground Healthcare enrollment is likely to decline 11% to 6,300, while Online enrollment is expected to be at the same level compared with the first quarter of 2023.

2024 Guidance

Total revenues are expected to grow 2-3% year over year to $610-$620 million. Adjusted EBITDA is expected to be between $55 and $65 million, reflecting down 8% to up 9% growth rate year over year. Capital expenditures are expected to be $17-$20 million, reflecting 22-44% growth.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -61.29% due to these changes.

VGM Scores

Currently, American Public Education has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, American Public Education has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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American Public Education, Inc. (APEI) : 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.

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