Back to top

Image: Bigstock

Why American Public's (APEI) Shares Dip 17% Over a Month

Read MoreHide Full Article

American Public Education, Inc. (APEI - Free Report) has tumbled almost 17% over a month compared with the Zacks Schools industry’s 9.8% fall and S&P 500’s 1.5% decline. In fact, its shares dipped more than 13% on May 11, after the company reported first-quarter 2021 results. In the last reported quarter, the top and bottom lines surpassed the Zacks Consensus Estimate, increased year over year and exceeded management’s respective guidance. However, its second-quarter projections impacted investors’ sentiments.

During the earnings call discussion, the company noted that the ongoing transition to ArmyIgniteED adversely affected Army enrollments after Mar 31, which will ultimately affect second-quarter results.

Let’s delve into the factors affecting this Zacks Rank #5 (Strong Sell) company.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Low Army Enrollment Poses Concern

American Public — which shares space with Strategic Education, Inc. (STRA - Free Report) , New Oriental Education & Technology Group Inc. (EDU - Free Report) and Lincoln Educational Services Corporation (LINC - Free Report) in the same industry — is struggling to generate higher year-over-year revenues in the second quarter as a result of reduced net course registrations at APUS after Mar 31. The temporary delay and suspension of the Army's new registration portal ArmyIgniteED might weigh on the results.

As pre-announced by the Army, the registration portal GoArmyEd went offline from Feb 11 to make way for the new portal ArmyIgniteED from Mar 8. However, the new portal came online but was taken down after a few hours due to technical challenges.

Active-duty Army soldiers are the company’s largest student segment and represent nearly one-quarter of total registrations in 2020. The Army's continuing challenges in activating its new registration portal resulted in significant fall in APUS registrations in April 2021. Although the portal is expected to restart in June, management is not sure when the new portal will be fully available.

Enrollment from students using FSA, TA and VA is highly volatile, and subject to stringent government regulations and other regulatory actions. Enrollment of students using FSA has been declining ever since the company shifted focus on improving the quality and mix of students. The downside in enrollment of students using FSA was caused by the implementation of new admission processes, intense competition in the markets served and adjustments in marketing activities.

Due to the above-mentioned headwinds, for the second quarter, it expects total net course registrations at APUS to decline 4-8% year over year. The company expects total revenues to fall 3-5% year over year. In the year-ago period, revenues grew 16.4% year over year. It anticipates the bottom line between a loss of 4 cents and an income of 3 cents per share, indicating a significant decline from the year-ago reported earnings figure of 45 cents. Adjusted earnings before interest, taxes, depreciation and amortization are anticipated within $7.3-$9.2 million.

Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>