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American Public's (APEI) Q4 Results Soft: Should You Dump ?

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On Mar 14, we issued an updated research report on American Public Education, Inc. (APEI - Free Report) – an online provider of higher education, primarily focused on serving the military and public service communities.

American Public reported disappointing results in the fourth quarter of 2016, wherein earnings missed the Zacks Consensus Estimate by 4.5%. Earnings also fell 30% year over year due to declining enrollments. Total revenue also missed expectations by 2.9% and decreased 8.5% year over year owing to lower revenues at both American Public University System or APUS and Hondros College of Nursing.

Enrollment Trends

APUS revenues and enrollments are being affected by persistent volatility and softness in enrollment by students using Federal Student Aid (“FSA”) and military tuition assistance (“TA”) over the past few quarters.

Net course registrations of new students using FSA plunged 46% while those using TA was down 19% in the fourth quarter. This declining enrollment trend of students using FSA is hurting the company’s overall revenues.

Net course registrations of new students were down 21.9% in 2016. Total enrollment at APUS declined 7.6%. The company expects this downtrend to continue in the next quarter as well.

Stock Price Movement

American Public’s shares lost over 17% year to date, underperforming the 11.4% gain of the Zacks categorized Schools industry. Declining enrollment trends are likely to weigh on the company’s performance in the upcoming quarters as well.



Estimate Revision

The company’s recent earnings estimates have been discouraging. The current quarter has seen two downward estimate revisions in the past 60 days, while full-year estimates has seen three downward revisions over the same time frame.

As a result, the current quarter’s consensus estimate dropped 35.6% in the past two months, while full-year estimates moved 21.2% lower, justifying the company’s Zacks Rank #5 (Strong Sell).

Stocks to Consider

Better-ranked stocks in the school industry include Bridgepoint Education, Inc. , Grand Canyon Education, Inc. (LOPE - Free Report) and DeVry Education Group Inc. .

All three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bridgepoint’s earnings are expected to increase 30.6% while that of Grand Canyon is expected to increase 9.3% in 2017.
 
DeVry is expected to see a 10.7% increase in fiscal 2017 earnings.

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