Capella Education Company (CPLA - Free Report) reported earnings of 90 cents per share in the second quarter of 2017, which surpassed the Zacks Consensus Estimate of 80 cents by 12.5%. However, earnings declined 3.2% year over year.
Share price of Capella dropped 8.2% to $80.80 in the trading session following its earnings release on Jul 25.
Revenues and Enrollment
Capella’s quarterly revenues of $109.6 million fell short of the Zacks Consensus Estimate of $110 million by 0.4%. Meanwhile, revenues improved 2.7% from the year-ago level despite a decline in the rate of enrollment growth.
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 covers Capella Learning Solutions, Hackbright Academy and DevMountain.
Post-Secondary: The segment reported revenues of $107.0 million, up 1.1% year over year in spite of a lower rate of enrollment growth. However, the operating margin of 16.6% showed a decline of 380 basis points (bps) year over year.
Capella University’s total active enrollment decreased 1.7% to 37,588 learners, while new enrollment dropped 9.6% on a year-over-year basis. Early cohort persistence improved approximately 3% year over year.
Job-Ready Skills: The segment reported revenues of $2.6 million in the second quarter, compared with $0.9 million in the prior-year quarter. The segment reported an operating loss of $2.4 million, compared with the $3.5 million loss reported in the prior-year quarter.
Capella’s operating income from continuing operations was $15.4 million, down 14.9% from the year-ago figure. Operating margin of 14.0% fell 290 bps year over year.
Capella, in the first half of 2017, generated $35.2 million in operating cash flow from continuing operations, compared with $42.8 million in the prior-year period.
Capella ended the quarter with cash and cash equivalents of $118 million, compared with $93.6 million at 2016-end.
Capital expenditures, in the first six months of 2017, totaled $12.1 million.
Revenues are expected to increase 2% to 3% year over year. Capella University’s new enrollment growth is likely to be flat year over year, while total enrollment is expected to be down about 1%.
The company’s operating margin is projected at about 11.5% to 12.5% for the quarter.
The company now expects revenue increase of about 3%, compared with its earlier projection of 3–5% growth.
Operating margins are likely to be about 15%. Earlier, the company had expected operating margins to be similar with the fiscal 2016 level of 15.9%.
Zacks Rank & Upcoming Peer Releases
Capella currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Public Education, Inc. (APEI - Free Report) is scheduled to report second-quarter results on Aug 8. The Zacks Consensus Estimate for quarterly earnings is pegged at 23 cents.
Strayer Education Inc. (STRA - Free Report) is scheduled slated to release its quarterly numbers on Jul 26. The Zacks Consensus Estimate for earnings is pegged stands at 88 cents.
Adtalem Global Education Inc. (ATGE - Free Report) is scheduled to release its quarterly numbers on Aug 17. The Zacks Consensus Estimate for earnings is pegged at 72 cents.
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