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American Public Education, Inc. (APEI - Analyst Report) is set to report fourth quarter and full year 2012 results on Feb 28. Last quarter it posted a 20% positive surprise. Let’s see how things are shaping up for this announcement. The stock carries a Zacks Rank #1 (Strong Buy).

Growth Factors This Past Quarter

American Public’s third quarter 2012 earnings beat both the Zacks Consensus Estimate and prior-year quarter’s adjusted earnings per share by 20%. Earnings were also significantly above the guidance range. Cost savings, owing to the company’s strategic initiatives, made up for the modest revenue growth, leading to the earnings beat.

Revenue and total and new enrollment growth were almost in line with management’s expectations. American Public has been consistently delivering positive growth in revenues, earnings and enrollments, despite a challenging industry environment.

This is impressive, as most other education companies like Apollo Group, Inc. (APOL - Analyst Report) and Capella Education Company (CPLA - Analyst Report) have been witnessing consistent enrollment declines.

Earnings Whisper

The fourth quarter Zacks Consensus Earnings Estimate stands at 67 cents, at the higher end of management guidance range of 64 cents and 67 cents a share. American Public’s fourth quarter financial guidance is more muted compared to solid results in the first three quarters of the year.

The company is expecting revenue growth in the range of approximately 9% to 13% for the fourth quarter of 2012. Management now expects fourth quarter 2012 enrollments to increase between 8% and 12% over the prior-year period.

New student enrollments are expected to decline between 3% and 7%. Management noted that if registrations from students who abused funds were excluded from the prior-year quarter figure, fourth-quarter 2012 new enrollment growth would have been up 8% to 9%.

For the full year, management expects earnings in the range of $2.25–$2.28.

Other Stocks to Consider

Our model states that a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, #2 or #3 to beat earnings estimates. You could consider some other education stocks like:

DeVry, Inc. (DV - Analyst Report), with an Earnings ESP of +2.50% and a Zacks Rank #2 (Buy)

Apollo Group, with an Earnings ESP of +11.11% and a Zacks Rank #3 (Hold)

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

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