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American Public Education (APEI) Beats on Q3 Earnings
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American Public Education, Inc. (APEI - Free Report) delivered better-than-expected third-quarter 2016 results, both in terms of earnings and sales.
Earnings Beat
Third-quarter adjusted earnings of 35 cents per share surpassed the Zacks Consensus Estimate of 31 cents by 12.9%. However, adjusted earnings per share declined 14.6% year over year due to lower revenues.
Revenues and Enrollment
Total revenue of $73.8 million beat the Zacks Consensus Estimate of $72.9 million by 1.2%. However, revenues dipped 3.3% year over year owing to declining revenues at both American Public University System (“APUS”) and Hondros College of Nursing (“HCON”).
American Public University System: Revenues dropped 3.1% at APEI to $67.1 million compared with $69.2 million in the prior-year period. This was due to a decrease in net course registrations, partially offset by the increase in Jul 2015 tuition.
Net course registrations at APUS fell 10% from the prior-year period. This was primarily due to a decrease in net course registrations by new students using Federal Student Aid (“FSA”) and military tuition assistance (“TA”).
Net course registrations by new students declined 23%, while net course registrations by returning students decreased 8%, both on a year-over-year basis.
Net course registrations of new students using FSA plunged 34%. The downside may be attributed to the company’s efforts to improve its quality mix of students, adjustments to its marketing efforts and increasing competition for online students.
Net course registrations using TA was down 20%, largely due to changes in the TA program by the Department of Defense.
Completion rates of undergraduate students using FSA at APUS increased approximately 17% year over year, with the month of August reaching the highest rate since 2010.
New enrollment of students using veteran benefits slipped 1%, while enrollment of students using cash and other sources declined 10%, both on a year-over-year basis.
Hondros College of Nursing: Revenues at Hondros College of Nursing fell 4.5% to $6.7 million from $7.1 million in the prior-year quarter. This was mainly due to lower enrollment trends.
Total enrollment at the Hondros College Nursing Programs (HCON) declined approximately 11% year over year to 1,610 students, while new student enrollment decreased 20% year over year.
This was primarily due to uncertain status of Hondros as a creditor ACICS and its effect on enrollment. Also, the company’s efforts to enhance the quality and efficiency of the curriculum and changes in the institution's leadership led to the downside.
Margins
Operating income plunged 96% to $0.4 million as profits declined both at APUS and HCON.
Costs and expenses were up 11.6% year over year to $73.4 million in the quarter. This was chiefly due to a $4.3 million loss on disposals of long-lived assets and a $0.8 million loss on assets held for sale in APUS segment and a $4.7 million charge for impairment of goodwill in the Hondros segment.
Financials
As of Sep 30, 2016, total cash and cash equivalents were approximately $137.7 million with no long-term debt. Capital expenditures were approximately $9.7 million for the nine months ended Sep 30, 2016, compared to $19.6 million in the prior-year period.
Fourth-Quarter 2016 Outlook
American Public Education anticipates fourth-quarter 2016 consolidated revenues to decrease approximately 6–3% year over year.
The company expects earnings in the range of 38 cents–43 cents per share.
At American Public University System, net course registrations by new students are expected to decrease between 30% and 26% on a year-over-year basis. Net course registrations are expected to decline between 14% and 10% year over year.
At Hondros College of Nursing, new student enrollment increased by approximately 1% year over year, whereas total student enrollment decreased around 13% year over year in the fourth quarter.
American Public currently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
Some better-ranked schools include Capella Education Co. , DeVry Education Group Inc. (DV - Free Report) and Grand Canyon Education, Inc. (LOPE - Free Report) .
Capella Education’s 2016 earnings are expected to increase by 8.97%.
Grand Canyon is expected to witness 12.95% grow in earnings in 2016.
For fiscal 2017, DeVry Education’s earnings are expected to increase 5.73%.
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American Public Education (APEI) Beats on Q3 Earnings
American Public Education, Inc. (APEI - Free Report) delivered better-than-expected third-quarter 2016 results, both in terms of earnings and sales.
Earnings Beat
Third-quarter adjusted earnings of 35 cents per share surpassed the Zacks Consensus Estimate of 31 cents by 12.9%. However, adjusted earnings per share declined 14.6% year over year due to lower revenues.
Revenues and Enrollment
Total revenue of $73.8 million beat the Zacks Consensus Estimate of $72.9 million by 1.2%. However, revenues dipped 3.3% year over year owing to declining revenues at both American Public University System (“APUS”) and Hondros College of Nursing (“HCON”).
American Public University System: Revenues dropped 3.1% at APEI to $67.1 million compared with $69.2 million in the prior-year period. This was due to a decrease in net course registrations, partially offset by the increase in Jul 2015 tuition.
Net course registrations at APUS fell 10% from the prior-year period. This was primarily due to a decrease in net course registrations by new students using Federal Student Aid (“FSA”) and military tuition assistance (“TA”).
Net course registrations by new students declined 23%, while net course registrations by returning students decreased 8%, both on a year-over-year basis.
Net course registrations of new students using FSA plunged 34%. The downside may be attributed to the company’s efforts to improve its quality mix of students, adjustments to its marketing efforts and increasing competition for online students.
Net course registrations using TA was down 20%, largely due to changes in the TA program by the Department of Defense.
Completion rates of undergraduate students using FSA at APUS increased approximately 17% year over year, with the month of August reaching the highest rate since 2010.
New enrollment of students using veteran benefits slipped 1%, while enrollment of students using cash and other sources declined 10%, both on a year-over-year basis.
Hondros College of Nursing: Revenues at Hondros College of Nursing fell 4.5% to $6.7 million from $7.1 million in the prior-year quarter. This was mainly due to lower enrollment trends.
Total enrollment at the Hondros College Nursing Programs (HCON) declined approximately 11% year over year to 1,610 students, while new student enrollment decreased 20% year over year.
This was primarily due to uncertain status of Hondros as a creditor ACICS and its effect on enrollment. Also, the company’s efforts to enhance the quality and efficiency of the curriculum and changes in the institution's leadership led to the downside.
Margins
Operating income plunged 96% to $0.4 million as profits declined both at APUS and HCON.
Costs and expenses were up 11.6% year over year to $73.4 million in the quarter. This was chiefly due to a $4.3 million loss on disposals of long-lived assets and a $0.8 million loss on assets held for sale in APUS segment and a $4.7 million charge for impairment of goodwill in the Hondros segment.
Financials
As of Sep 30, 2016, total cash and cash equivalents were approximately $137.7 million with no long-term debt. Capital expenditures were approximately $9.7 million for the nine months ended Sep 30, 2016, compared to $19.6 million in the prior-year period.
Fourth-Quarter 2016 Outlook
American Public Education anticipates fourth-quarter 2016 consolidated revenues to decrease approximately 6–3% year over year.
The company expects earnings in the range of 38 cents–43 cents per share.
At American Public University System, net course registrations by new students are expected to decrease between 30% and 26% on a year-over-year basis. Net course registrations are expected to decline between 14% and 10% year over year.
At Hondros College of Nursing, new student enrollment increased by approximately 1% year over year, whereas total student enrollment decreased around 13% year over year in the fourth quarter.
AMER PUB EDUCAT Price, Consensus and EPS Surprise
AMER PUB EDUCAT Price, Consensus and EPS Surprise | AMER PUB EDUCAT Quote
American Public currently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
Some better-ranked schools include Capella Education Co. , DeVry Education Group Inc. (DV - Free Report) and Grand Canyon Education, Inc. (LOPE - Free Report) .
All three companies hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Capella Education’s 2016 earnings are expected to increase by 8.97%.
Grand Canyon is expected to witness 12.95% grow in earnings in 2016.
For fiscal 2017, DeVry Education’s earnings are expected to increase 5.73%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>