A month has gone by since the last earnings report for Capella Education Company . Shares have lost about 10.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Capella Education Tops Q1 Earnings, Enrollments Up
Capella Education reported adjusted earnings of $0.94 in the first quarter of 2017, which surpassed the Zacks Consensus Estimate of $0.87 by 8.1%. Adjusted earnings per share increased 9.3% year over year.
Revenues and Enrollments
Capella Education’s quarterly revenues of $111.8 million beat the Zacks Consensus Estimate of $111.0 million by a nominal margin. Revenues also inched up 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. Revenues were at the high end of the projected range of 5% to 6%.
Capella Education reports under two segments: Post-Secondary and Job-Ready Skills. While the Post-Secondary segment comprises Capella University and Sophia Learning, the Job-Ready Skills segment consists of Capella Learning Solutions, Hackbright Academy and DevMountain.
Post-Secondary: The segment reported revenues of $109.5 million, up 3.8% year over year, driven by positive enrollment levels at Capella University. Operating margin of 18.5% increased 170 basis points (bps) year over year.
Capella University’s total active enrollment increased 8% to 38,802 learners, while new enrollment increased 3.6% on a year-over-year basis. Early cohort persistence improved 5% year over year but was flat sequentially.
Job-Ready Skills: The segment reported revenues of $2.3 million in the quarter, compared with $0.02 million in the prior-year quarter. The segment reported an operating loss of $2.7 million, wider than the loss of $1.2 million reported in the prior-year quarter.
Margins
Capella Education’s operating income from continuing operations was $17.6 million, up 6.7% from the year-ago figure. Operating margin of 15.7% was flat with the prior-year quarter level.
Financials
Capella Education generated $16.2 million in operating cash flow from continuing operations, compared with $22.7 million in the prior-year quarter.
Capella Education ended the quarter with cash and cash equivalents of $99.1 million, compared with $93.6 million at 2016-end.
Capital expenditures in the quarter totaled $5.8 million.
Second-Quarter 2017 Guidance
Consolidated revenues are expected to rise 2.5% to 3.5% from first-quarter 2016 levels. Capella University’s new enrollments are likely to decline in the low-single digit range, while total enrollment is likely to decline 1% year over year.
Consolidated operating margin from continuing operations is projected at about 13.5% to 14.5% of total revenue for the quarter.
2017 Guidance
Consolidated revenues are expected to rise 3% to 5%.
Operating margins are likely to be similar to the fiscal 2016 level of 15.9%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 16.8% due to these changes.
VGM Scores
At this time, Capella's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% 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.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Capella (CPLA) Down 10.2% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Capella Education Company . Shares have lost about 10.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Capella Education Tops Q1 Earnings, Enrollments Up
Capella Education reported adjusted earnings of $0.94 in the first quarter of 2017, which surpassed the Zacks Consensus Estimate of $0.87 by 8.1%. Adjusted earnings per share increased 9.3% year over year.
Revenues and Enrollments
Capella Education’s quarterly revenues of $111.8 million beat the Zacks Consensus Estimate of $111.0 million by a nominal margin. Revenues also inched up 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. Revenues were at the high end of the projected range of 5% to 6%.
Capella Education reports under two segments: Post-Secondary and Job-Ready Skills. While the Post-Secondary segment comprises Capella University and Sophia Learning, the Job-Ready Skills segment consists of Capella Learning Solutions, Hackbright Academy and DevMountain.
Post-Secondary: The segment reported revenues of $109.5 million, up 3.8% year over year, driven by positive enrollment levels at Capella University. Operating margin of 18.5% increased 170 basis points (bps) year over year.
Capella University’s total active enrollment increased 8% to 38,802 learners, while new enrollment increased 3.6% on a year-over-year basis. Early cohort persistence improved 5% year over year but was flat sequentially.
Job-Ready Skills: The segment reported revenues of $2.3 million in the quarter, compared with $0.02 million in the prior-year quarter. The segment reported an operating loss of $2.7 million, wider than the loss of $1.2 million reported in the prior-year quarter.
Margins
Capella Education’s operating income from continuing operations was $17.6 million, up 6.7% from the year-ago figure. Operating margin of 15.7% was flat with the prior-year quarter level.
Financials
Capella Education generated $16.2 million in operating cash flow from continuing operations, compared with $22.7 million in the prior-year quarter.
Capella Education ended the quarter with cash and cash equivalents of $99.1 million, compared with $93.6 million at 2016-end.
Capital expenditures in the quarter totaled $5.8 million.
Second-Quarter 2017 Guidance
Consolidated revenues are expected to rise 2.5% to 3.5% from first-quarter 2016 levels. Capella University’s new enrollments are likely to decline in the low-single digit range, while total enrollment is likely to decline 1% year over year.
Consolidated operating margin from continuing operations is projected at about 13.5% to 14.5% of total revenue for the quarter.
2017 Guidance
Consolidated revenues are expected to rise 3% to 5%.
Operating margins are likely to be similar to the fiscal 2016 level of 15.9%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 16.8% due to these changes.
Capella Education Company Price and Consensus
Capella Education Company Price and Consensus | Capella Education Company Quote
VGM Scores
At this time, Capella's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% 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.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.