A month has gone by since the last earnings report for American Public Education (
APEI Quick Quote APEI - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Public Education due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
American Public Q1 Earnings & Revenues Lag Estimates
American Public Education, Inc. reported lower-than-expected results in first-quarter 2022. Quarterly earnings and revenues missed the Zacks Consensus Estimate. Although revenues increased owing to higher enrollment, earnings declined on a year-over-year basis due to increased costs and expenses.
Notably, APEI completed the acquisitions of Rasmussen University ("RU") and GSUSA on Sep 1, 2021, and Jan 1, 2022, respectively. However, prior-year results did not include the results of operations of RU and GSUSA. Also, they were not directly comparable to the current period. Delving Deeper
The company reported adjusted earnings per share of 12 cents, which missed the consensus mark of 19 cents by 36.8% and decreased from 49 cents a year ago.
Total revenues of $154.7 million also came in below the consensus mark of $157 million by 1.5% but increased 75% from the year-ago period’s level. The upside was backed by the acquisitions and higher enrollment. Total costs and expenses increased nearly 92% year over year to $149.5 million due to the inclusion of RU. Adjusted EBITDA increased 8.8% year over year to $17.4 million. Segment Discussion
The company now operates within three segments, namely, American Public University System (“APUS”), RU and Hondros College of Nursing (“HCN”).
APUS: Revenues declined 5.7% from the year-ago period to $73.1 million. Enrollments grew 1.2% but revenues declined owing to the timing of registrations during the quarter. Also, lower revenue per net course registrations led to the decline, given a change in mix to military registrations, which generate lower revenue per registration than non-military registrations. APUS’s total net course registration increased 1.2% from the year-ago period to 94,000 in the first quarter. RU: The segment reported revenues of $67.1 million for the quarter. RU’s total student enrollment also fell 6.4% from the prior-year quarter’s figure to 16,200. HCN: This segment’s revenues rose 3.7% year over year to $11.5 million, owing to improved enrollment. Total student enrollment at HCN increased 8.1% from the prior-year quarter’s level to 2,500. Meanwhile, GSUSA contributed $3.1 million to total revenues in the quarter. Financials
At March 2022-end, American Public had total cash and cash equivalents of $170.9 million compared with $149.6 million at 2021-end. Higher cash provided by operating activities and net cash received as a result of the GSUSA acquisition led to the upside. However, increases in capital expenditures and payments of principal and interest on debt obligations partly offset the positives.
The company expects total revenues to increase 92-97% year over year. APEI expects earnings within break-even at seven cents per share, indicating a decline of 100-133% year over year. Adjusted EBITDA is anticipated within $14.3-$16.2 million, suggesting a rise of 44-63% year over year.
At APUS, total net course registrations are likely to fall 2-1% year over year to 80,900-83,400. HCN’s total student enrollment is expected to increase by 3% from the prior year’s tally to 2,400. RU’s student enrollment is likely to fall 6% from the year-ago quarter’s figure to 15,900 (due to a 2% decline in Nursing and a 10% decline in Non-Nursing). How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -74.71% due to these changes.
Currently, American Public Education has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise American Public Education has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
American Public Education belongs to the Zacks Schools industry. Another stock from the same industry, Strategic Education (
STRA Quick Quote STRA - Free Report) , has gained 6.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Strategic Education reported revenues of $258.86 million in the last reported quarter, representing a year-over-year change of -10.8%. EPS of $0.54 for the same period compares with $1.53 a year ago.
For the current quarter, Strategic Education is expected to post earnings of $0.97 per share, indicating a change of -37.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Strategic Education has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.