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Apollo Gets a New COO

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Apollo Group Inc. recently appointed J. Mitchell Bowling as the new chief operating officer, effective from Dec 2, 2013.

Mr. Bowling held the position of senior vice president and general manager, new businesses, at media and technology company Comcast Corporation prior to joining Apollo. With his extensive experience and a record of delivering positive results, Mr. Bowling is expected to drive growth for Apollo.

In late October, Apollo reported strong fourth-quarter fiscal 2013 results, beating the Zacks Consensus Estimate for both revenues and earnings, even though enrollment continued to decline. Apollo’s enrollments have been sluggish for many quarters. Enrollment trends throughout the education industry have been affected by changing regulatory requirements, sluggish demand due to students’ aversion to debt, robust competition and a volatile economy.

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Apollo carries a Zacks Rank #3 (Hold). Overall, we are positive about Apollo Group’s dominant market position and focus on offering relevant career oriented educational programs. Its accelerated efforts to right-size its business through significant layoffs and campus closings will make it more competitive in the long term. Apollo’s investments in adaptive learning, curriculum development, new learning systems and student service platforms should improve student value proposition and retention rates.

Though encouraging, these initiatives are yet to show any sustainable enrollment growth. The lack of visibility on enrollment improvement and the possibility of regulatory changes keep us on the sidelines.

Better-placed stocks in the education sector include New Oriental Education & Technology Group Inc. (EDU - Free Report) and Xueda Education Group . Both the companies carry a Zacks Rank #1 (Strong Buy).

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