A month has gone by since the last earnings report for Capella Education Company . Shares have added about 3.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
Capella Education Tops Q4 Earnings & Revenues
Capella Education Company reported adjusted earnings of $0.97 in the fourth quarter of 2016, which surpassed the Zacks Consensus Estimate of $0.95 by 2.1%. Adjusted earnings per share decreased 7.6% year over year.
Revenues and Enrollment
Capella’s quarterly revenues of $111.3 million beat the Zacks Consensus Estimate of $110.5 million by 0.7%. Revenues inched up 4.9% from the year-ago level, owing to an improvement in enrollment levels. Revenues were at the high end of the projected range of 3.5% to 4.5%.
Capella reports under two segments: Post-Secondary and Job-Ready Skills. While the Post-Secondary segment comprises Capella University and Sophia Learning, the Job-Ready Skills segment consists of Capella Learning Solutions, Hackbright Academy and DevMountain.
Post-Secondary: The segment reported revenues of $109.4 million, up 3.1% year over year, driven by positive enrollment levels at Capella University. Operating margin of 18.9% decreased 210 basis points (bps) year over year.
Capella University’s total active enrollment increased 2.5% to 37,882 learners, supported by significantly improved persistence, offset by a slight decrease in enrollment growth. New enrollment decreased by 1.1% year over year primarily due to persistent volatility.
Early cohort persistence improved by approximately 5%. This marks the 20 consecutive quarter of improvement in early cohort persistence, implying that overall betterment in persistence is offsetting some of the volatility in new enrollment and is also driving total enrollments and operating performance.
Job-Ready Skills: The segment reported revenues of $1.9 million in the quarter, compared with $0.02 million in the prior-year quarter. The segment reported an operating loss of $2.4 million compared with a loss of $1.8 million in the prior-year quarter.
Margins
Capella’s operating income from continuing operations was $18.3 million, compared with $20.5 million a year ago. Operating margin decreased 290 bps to 16.4%. The company increased its marketing spend in the fourth quarter 2016, in order to boost new enrollment growth for Capella University in the upcoming quarters.
Financials
Capella generated $85.1 million in operating cash flow from continuing operations, ending the quarter with cash, cash equivalents and marketable securities of $162.3 million, up by $3 million from 2015-end on the back of strong cash generation.
During the quarter, the company announced a 5% increase in its quarterly cash dividend to $0.41 per outstanding share of common stock, payable on Jan 13, 2017,
The company repurchased approximately 488,000 shares of Capella stock for a total consideration of $25.6 million in fiscal 2016 and approximately 51,000 shares of Capella stock for a total consideration of $3.1 million in the fourth quarter of 2016. The remaining authorization, as of the end of the fourth quarter, was $30.4 million.
Capital expenditures in the quarter were $6.2 million.
2016 Results
Capella reported adjusted earnings of $3.62 in 2016, up 10.7% year over year. Earnings were above the estimated range of $3.50 to $3.55.
Capella’s quarterly revenues of $429.4 million inched up 3.1% from the year-ago level, owing to a strong performance by the Post-Secondary segment. Revenues were slightly higher than the expected range of $424–$428 million.
Other Updates
Capella received 15.2 million of proceeds from the sale of Arden University in the second half of 2016. This was offset by the use of cash for the acquisitions of HackBright Academy and DevMountain for a combined $32 million during the second quarter.
First-Quarter 2017 Guidance
Consolidated revenues are expected to be up 5% to 6% from first-quarter 2016 levels. Capella University new enrollment is expected to be up in the low-single digit range and total enrollment is likely to increase by 1% year over year.
Consolidated operating margin from continuing operations is projected at about 14.5% to 15.5% of total revenue for the quarter.
2017 Guidance
Consolidated revenues are expected to be up 3% to 5%.
Operating margins are expected to be similar to fiscal 2016 levels.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Capella Education's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is more suitable for growth investors than value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Capella Education (CPLA) Up 3.8% Since the Last Earnings Report?
A month has gone by since the last earnings report for Capella Education Company . Shares have added about 3.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
Capella Education Tops Q4 Earnings & Revenues
Capella Education Company reported adjusted earnings of $0.97 in the fourth quarter of 2016, which surpassed the Zacks Consensus Estimate of $0.95 by 2.1%. Adjusted earnings per share decreased 7.6% year over year.
Revenues and Enrollment
Capella’s quarterly revenues of $111.3 million beat the Zacks Consensus Estimate of $110.5 million by 0.7%. Revenues inched up 4.9% from the year-ago level, owing to an improvement in enrollment levels. Revenues were at the high end of the projected range of 3.5% to 4.5%.
Capella reports under two segments: Post-Secondary and Job-Ready Skills. While the Post-Secondary segment comprises Capella University and Sophia Learning, the Job-Ready Skills segment consists of Capella Learning Solutions, Hackbright Academy and DevMountain.
Post-Secondary: The segment reported revenues of $109.4 million, up 3.1% year over year, driven by positive enrollment levels at Capella University. Operating margin of 18.9% decreased 210 basis points (bps) year over year.
Capella University’s total active enrollment increased 2.5% to 37,882 learners, supported by significantly improved persistence, offset by a slight decrease in enrollment growth. New enrollment decreased by 1.1% year over year primarily due to persistent volatility.
Early cohort persistence improved by approximately 5%. This marks the 20 consecutive quarter of improvement in early cohort persistence, implying that overall betterment in persistence is offsetting some of the volatility in new enrollment and is also driving total enrollments and operating performance.
Job-Ready Skills: The segment reported revenues of $1.9 million in the quarter, compared with $0.02 million in the prior-year quarter. The segment reported an operating loss of $2.4 million compared with a loss of $1.8 million in the prior-year quarter.
Margins
Capella’s operating income from continuing operations was $18.3 million, compared with $20.5 million a year ago. Operating margin decreased 290 bps to 16.4%. The company increased its marketing spend in the fourth quarter 2016, in order to boost new enrollment growth for Capella University in the upcoming quarters.
Financials
Capella generated $85.1 million in operating cash flow from continuing operations, ending the quarter with cash, cash equivalents and marketable securities of $162.3 million, up by $3 million from 2015-end on the back of strong cash generation.
During the quarter, the company announced a 5% increase in its quarterly cash dividend to $0.41 per outstanding share of common stock, payable on Jan 13, 2017,
The company repurchased approximately 488,000 shares of Capella stock for a total consideration of $25.6 million in fiscal 2016 and approximately 51,000 shares of Capella stock for a total consideration of $3.1 million in the fourth quarter of 2016. The remaining authorization, as of the end of the fourth quarter, was $30.4 million.
Capital expenditures in the quarter were $6.2 million.
2016 Results
Capella reported adjusted earnings of $3.62 in 2016, up 10.7% year over year. Earnings were above the estimated range of $3.50 to $3.55.
Capella’s quarterly revenues of $429.4 million inched up 3.1% from the year-ago level, owing to a strong performance by the Post-Secondary segment. Revenues were slightly higher than the expected range of $424–$428 million.
Other Updates
Capella received 15.2 million of proceeds from the sale of Arden University in the second half of 2016. This was offset by the use of cash for the acquisitions of HackBright Academy and DevMountain for a combined $32 million during the second quarter.
First-Quarter 2017 Guidance
Consolidated revenues are expected to be up 5% to 6% from first-quarter 2016 levels. Capella University new enrollment is expected to be up in the low-single digit range and total enrollment is likely to increase by 1% year over year.
Consolidated operating margin from continuing operations is projected at about 14.5% to 15.5% of total revenue for the quarter.
2017 Guidance
Consolidated revenues are expected to be up 3% to 5%.
Operating margins are expected to be similar to fiscal 2016 levels.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Capella Education Company Price and Consensus
Capella Education Company Price and Consensus | Capella Education Company Quote
VGM Scores
At this time, Capella Education's stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is more suitable for growth investors than value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.