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American Public: Earnings Strong, Enrollment Trends Weak
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On Dec 13, we issued an updated research report on American Public Education, Inc. (APEI - Free Report) – an online provider of higher education, primarily focused on serving the military and public service communities.
Although American Public is facing persistent volatility and softness in enrollment, its strategic relationships, strong earnings and affordability of courses enhance its prospects.
Investors should note that shares of American Public gained over 34% year to date, outperforming the 29.5% rise of the Schools industry. Also, it has an impressive earnings history, beating estimates for the fifth consecutive quarter.
However, over the past 30 days, the Zacks Consensus Estimate has decreased for 2016 earnings. Also, 2016 earnings and sales are projected to decline nearly 3.6% and 11.3%, respectively, raising questions over this Zacks Rank #3 (Hold) company’s prospects.
Strengths
American Public’s bottom line exceeded management’s guidance and investors’ expectations, increasing double digits on a year-over-year basis in the past three quarters. The company’s focus on improving student persistence has reduced bad debt expense and has led to higher margins. This is likely to drive earnings in the near term as well.
The company has undertaken several initiatives to improve enrollment trends at American Public University System (“APUS”) and student persistence. The company intends to drive student’s persistence by improving the quality of student mix, release of new tools for students and implement other initiatives to increase students’ engagement and classroom interactivity.
Its courses have been specifically designed to suit online studies and its faculty is also specially trained for online teaching. Online programs are well-suited for the unpredictable and demanding work schedules of military personnel who are required to travel and relocate frequently and have limited financial resources.
Weaknesses
The company is experiencing declining enrollment trends at both APUS and Hondros College. Enrollment of students using Federal Student Aid (“FSA”) has been declining ever since the company shifted focus toward improving the quality mix of students. The decline in enrollment of students using FSA was due to the implementation of new admission processes and intense competition. The company expects this downtrend to continue in the next quarter as well.
Enrollment of active-duty military students is subject to changes in military activity. Military enrollment remains unpredictable at any given point of time. Moreover, the U.S Army implemented a new enrollment management tool that has several issues including the difficulty in choosing APUS as preferred institution. APUS’ enrollment and net course registrations in 2016 may be hurt by these issues.
American Public Education anticipates fourth-quarter 2016 consolidated revenues to decrease approximately 6–3% year over year. 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.
Stocks to Consider
Better-ranked stocks in the Schools industry include Capella Education Company , DeVry Education Group Inc. (DV - Free Report) and Grand Canyon Education, Inc. (LOPE - Free Report) .
All the three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Fiscal 2017 earnings for DeVry are expected to increase 5.9%.
Capella is expected to witness 8.9% growth in full-year 2016 earnings.
Full-year 2016 earnings for Grand Canyon are expected to rise 12.9%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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American Public: Earnings Strong, Enrollment Trends Weak
On Dec 13, we issued an updated research report on American Public Education, Inc. (APEI - Free Report) – an online provider of higher education, primarily focused on serving the military and public service communities.
Although American Public is facing persistent volatility and softness in enrollment, its strategic relationships, strong earnings and affordability of courses enhance its prospects.
Investors should note that shares of American Public gained over 34% year to date, outperforming the 29.5% rise of the Schools industry. Also, it has an impressive earnings history, beating estimates for the fifth consecutive quarter.
However, over the past 30 days, the Zacks Consensus Estimate has decreased for 2016 earnings. Also, 2016 earnings and sales are projected to decline nearly 3.6% and 11.3%, respectively, raising questions over this Zacks Rank #3 (Hold) company’s prospects.
Strengths
American Public’s bottom line exceeded management’s guidance and investors’ expectations, increasing double digits on a year-over-year basis in the past three quarters. The company’s focus on improving student persistence has reduced bad debt expense and has led to higher margins. This is likely to drive earnings in the near term as well.
The company has undertaken several initiatives to improve enrollment trends at American Public University System (“APUS”) and student persistence. The company intends to drive student’s persistence by improving the quality of student mix, release of new tools for students and implement other initiatives to increase students’ engagement and classroom interactivity.
Its courses have been specifically designed to suit online studies and its faculty is also specially trained for online teaching. Online programs are well-suited for the unpredictable and demanding work schedules of military personnel who are required to travel and relocate frequently and have limited financial resources.
Weaknesses
The company is experiencing declining enrollment trends at both APUS and Hondros College. Enrollment of students using Federal Student Aid (“FSA”) has been declining ever since the company shifted focus toward improving the quality mix of students. The decline in enrollment of students using FSA was due to the implementation of new admission processes and intense competition. The company expects this downtrend to continue in the next quarter as well.
Enrollment of active-duty military students is subject to changes in military activity. Military enrollment remains unpredictable at any given point of time. Moreover, the U.S Army implemented a new enrollment management tool that has several issues including the difficulty in choosing APUS as preferred institution. APUS’ enrollment and net course registrations in 2016 may be hurt by these issues.
American Public Education anticipates fourth-quarter 2016 consolidated revenues to decrease approximately 6–3% year over year. 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.
Stocks to Consider
Better-ranked stocks in the Schools industry include Capella Education Company , DeVry Education Group Inc. (DV - Free Report) and Grand Canyon Education, Inc. (LOPE - Free Report) .
All the three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Fiscal 2017 earnings for DeVry are expected to increase 5.9%.
Capella is expected to witness 8.9% growth in full-year 2016 earnings.
Full-year 2016 earnings for Grand Canyon are expected to rise 12.9%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>