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American Public (APEI) Stock Down Despite Q3 Earnings Beat

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American Public Education, Inc. (APEI - Free Report) reported impressive third-quarter 2020 results, wherein both the top and the bottom line beat the Zacks Consensus Estimate and grew year over year. Despite the solid results, the company’s shares slipped 1.5% during after-hour trading session on Nov 9.

Nonetheless, the metrics exceeded management guidance on enrollment growth across the segments.

In this regard, Angela Selden, chief executive officer of American Public, stated, " Even with increased investment in technology to improve the student experience and additional marketing spend to support the APUS brand, the strong enrollments at APUS combined with the turnaround at Hondros resulted in year-over-year margin expansion."

American Public Education, Inc. Price, Consensus and EPS Surprise

 

American Public Education, Inc. Price, Consensus and EPS Surprise

American Public Education, Inc. price-consensus-eps-surprise-chart | American Public Education, Inc. Quote

Delving Deeper

For the third quarter, American Public reported adjusted earnings of 18 cents per share. In the prior-year quarter, the company reported a loss of 10 cents per share.

Total revenues of $79.1 million surpassed the consensus mark of $76 million by 4.1% and grew 16.6% from the year-ago period. The upside was mainly driven by solid performance across the business.

During the quarter, total costs and expenses, as a percentage of revenues, improved 850 basis points to 95.8% year over year.

Segment Discussion

APEI: Third-quarter revenues of $69.6 million grew 13.7% from the year-ago period. Within the APEI segment, American Public University System’s (“APUS”) student enrollment grew 7% from the comparable year-ago period to 86,300 at September-end. For the quarter, total net course registration jumped 18% from the year-ago period to 90,300. Net course registrations by new students surged a notable 25% from the prior-year figure to 13,500.

HCN: During the third quarter, segment’s revenues rose 42.5% year over year to $9.5 million owing to improved enrollments. Total student enrollment at HCN increased 38% to 1,950, while new student enrollment rose 88% from the prior-year quarter to 649.

For the quarter, inter-segment elimination revenues came in at ($18) million, compared with ($25) million in the prior-year quarter.

Financials

As of Sep 30, 2020, American Public had total cash and cash equivalents of $228 million compared with $202.7 million at 2019-end. Capital expenditure totaled $1.3 million for the third quarter compared with $1.2 million a year ago.

Fourth-Quarter 2020 Guidance

For the fourth quarter of 2020, the company expects total revenues to grow 10-14% year over year. In the year-ago period, revenues declined 3.3% year over year. It anticipates earnings within 41-46 cents per share, indicating growth from 37 cents reported in the year-ago quarter.

Net course registrations by new students at APUS are expected to increase within 11-15% year over year. Total net course registrations are likely to grow 6-10% year over year. HCN’s new student and total student enrollment is expected to grow nearly 34% from the prior year.

Zacks Rank & Key Picks

American Public currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Consumer Discretionary sector are K12 Inc. (LRN - Free Report) , TEGNA Inc. (TGNA - Free Report) and YETI Holdings, Inc. (YETI - Free Report) , each sporting a Zacks Rank #1.

K12 has a three-five-year earnings per share growth rate of 20%.

TEGNA has a trailing four-quarter earnings surprise of 20.2%, on average.

YETI Holdings 2021 earnings are expected to surge 19.4%.

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