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Analyst Blog

The board of directors of Capella Education Company (CPLA - Analyst Report) recently raised its share repurchase authorization by $50 million. This increase is in addition to the $6 million remaining under the existing program as of Jun 30, 2013.  

The increase in the share repurchase authorization program indicates the company’s strong liquidity position. The company had $107.6 million of cash and cash equivalents as of June 30, 2013.

On Jul 23, Capella reported second quarter 2013 results. Its second quarter 2013 earnings of 83 cents a share surpassed the Zacks Consensus Estimate of 66 cents by 25.8% on the back of better-than-expected new enrollment and total enrollment in the quarter.

However, earnings declined 2.4% from the year-ago quarter due to year-over-year decreases in revenues and margins. Better-than-anticipated new enrollment and total enrollment, however, could not offset the year-over-year downward drift in earnings.

Like another education company Apollo Group Inc. (APOL - Analyst Report), Capella has been witnessing volatile enrollment growth since the last few quarters. For the third quarter of 2013, Capella expects new enrollments to decline in a mid- to single-digit percentage range. Total enrollment is expected to dip 2% to 4% in the third quarter.

Revenues are expected to be flat to up 1% in the third quarter of 2013. Operating margin is expected to be in the range of 8% to 9% for the third quarter.

Capella carries a Zacks Rank #1 (Strong Buy).

Other education companies that are performing well are Grand Canyon Education, Inc. (LOPE - Snapshot Report) and TAL Education Group (XRS - Snapshot Report). Both these companies carry a Zacks Rank #2 (Buy).
 

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