It has been about a month since the last earnings report for American Public Education (APEI Quick QuoteAPEI - Free Report) . Shares have lost about 1.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is American Public Education due for a breakout? 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 Beat

American Public delivered strong results for first-quarter 2024. The bottom line handily surpassed the Zacks Consensus Estimate and significantly improved from the previous year.

Revenues also beat the analysts’ expectations and jumped year over year, on the back of contributions from the American Public University System (“APUS”) and Hondros College of Nursing (“HCN”) segment. Yet, lower revenues from Rasmussen University ("RU") and Graduate School ("GSUSA") partially offset the growth.

The company has been benefiting from consistent enrollment growth at APUS and HCN, along with improvement at RU. Also, select tuition and fee increases, combined with the positive impact of cost reductions and realignments taken in 2023 added to the growth.

Delving Deeper

The company reported an adjusted loss of 6 cents per share, which beat the consensus mark of a loss of 19 cents by 68.4%. In the prior year, the company reported an adjusted loss of 38 cents per share.

Total revenues of $154.4 million topped the consensus mark of $152 million by 1.4% and inched up 3.2% from the year-ago period’s levels. The reported figure exceeded the high end of the guidance provided by APEI in fourth-quarter 2023.

Total costs and expenses decreased 3.7% year over year to $149.3 million. A decline in advertising, and depreciation and amortization costs aided the results. Adjusted EBITDA increased a whopping 143% year over year to $17.1 million, exceeding high-end guidance of $10 million. Adjusted EBITDA margin of 11% expanded from 5% year over year.

Segment Discussion

APUS: Revenues of $80.7 million rose 9% from the year-ago period’s levels. The uptick was primarily due to growth in registrations and the impact of select tuition increases in 2023. APUS’ total net course registration increased 2.8% from the year-ago period to 99,000. In the quarter, military registrations were up 4%. Adjusted EBITDA margin of 30% expanded from 25% year over year, driven by higher enrollment, select price increases, and lower marketing spend.

RU: The segment reported revenues of $53.1 million for the quarter, down 8% from $57.5 million reported a year ago. This was due to lower ADN nursing enrollment. RU’s total student enrollment fell 5.6% to 13,500 due to a 11% decline in on-ground Healthcare enrollment. Adjusted EBITDA margin of negative 5% narrowed from negative 8% reported in the prior year, due to stabilizing enrollment and cost realignment.

HCN: The segment’s revenues rose 25% year over year to $16.4 million. The increase was backed by solid growth in total student enrollment and modest tuition and fee increase. Total student enrollment at HCN increased 22% from the prior-year quarter’s levels to 3,300. Adjusted EBITDA margin of 0.1% improved from negative 7.7% reported a year ago.

GSUSA: The segment’s revenues decreased 18% year over year to $4.2 million impacted by government spending uncertainty. Adjusted EBITDA margin of negative 27% widened from the year-ago figure of negative 25%. This was included in Corporate and Other.

Financials

At the end of the first quarter, American Public had total cash, cash equivalents, and restricted cash of $153.2 million, up from $144.3 million at 2023-end.

Q2 Guidance

APEI expects total revenues to increase 4 year over year to $153-$155 million. It anticipates profits between a loss of 11 and an earnings of 5 cents per share versus a loss of 25 cents reported a year ago. Adjusted EBITDA is expected to be within $8-$12 million, a rise of 2-36% year over year.
 
APUS’ total net course registrations are likely to be 89,500-92,200, reflecting growth of 1.5-4.5% year over year. HCN’s total enrollment is expected to increase 10% from the prior year’s figure to 3,300 students. RU’s student enrollment is expected to decline 2% from the year-ago quarter’s figure to 13,600. On-ground Healthcare student enrollment is likely to decline 9% to 6,200, while Online student enrollment is expected to rise 4% to 7,400, year over year.

2024 Guidance Raised

Total revenues are now expected to grow 3-5% year over year to $620-$630 million versus the prior projection of $610-$620 million. Adjusted EBITDA is now expected to be between $60 and $70 million (up from earlier expectations of $55-$65 million), reflecting 1-17% growth year over year.

Capital expenditures are still expected to be in the range of $17-$20 million, reflecting 22-44% growth.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 25% due to these changes.

VGM Scores

At this time, American Public Education has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, American Public Education has a Zacks Rank #3 (Hold). We expect an in-line 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, Adtalem Global Education (ATGE Quick QuoteATGE - Free Report) , has gained 1.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Adtalem reported revenues of $412.66 million in the last reported quarter, representing a year-over-year change of +11.8%. EPS of $1.50 for the same period compares with $1.13 a year ago.

For the current quarter, Adtalem is expected to post earnings of $1.24 per share, indicating a change of +20.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.8% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Adtalem. Also, the stock has a VGM Score of B.