American Public Education, Inc. (APEI - Free Report) reported second-quarter 2017 earnings per share of 23 cents, which came in line with the Zacks Consensus Estimate. Earnings decreased considerably by 43.9% year over year due to declining revenues, owing to sluggishness in enrollments.
Shares of American Public Education decreased more than 12% on Aug 9, following the company’s weak second-quarter 2017 results.
Revenues and Enrollment
Total revenue of $72.2 million surpassed the Zacks Consensus Estimate of $70 million by 3.1%. Revenues however decreased 5.9% year over year, owing to lower contribution from American Public University System.
The company operates in two segments – American Public Education Segment or APEI and Hondros College, Nursing Programs (HCN).
APEI primarily includes operations of American Military University and American Public University, together referred to as American Public University System, Inc. (APUS).
Revenues declined 7.5% to $64.3 million from $69.5 million in the prior-year quarter due to a 6% decrease in net course registrations.
In the quarter, total net course registration at APUS declined 6% year over year, while net course registrations by new students declined 9% during the period.
Net course registrations of new students declined due to a 29% decrease in net course registrations by new students using Federal Student Aid (FSA).
Net course registrations by new students utilizing military tuition assistance or TA and veteran benefits or VA were approximately flat year-over-year.
Completion rates of undergraduate students using FSA at APUS increased approximately 19% year over year. The company is witnessing improving student success and overall quality of its offerings as is evident from the completion rates.
Hondros College of Nursing revenues increased 9.4% to $7.9 million from the prior-year quarter owing to higher new enrollments.
Total enrollment at the Hondros College Nursing Programs declined 3% year over year to 1,720 students, while new student enrollment increased 31% year over year.
Inside the Headline Numbers
Income from operations before interest income and income taxes was $6.3 million, compared with $10.7 million in the prior-year quarter.
Total costs and expenses decreased 0.3% year over year to $65.9 million in the quarter.
Selling and promotional or S&P expenses, as a percentage of revenues, declined to 19.4% from 19.5% in the prior-year quarter.
As of Jun 30, 2017, total cash and cash equivalents were approximately $157.1 million compared with $124.1 million as of Jun 30, 2016. Capital expenditures were approximately $3.8 million during the first half of 2017, decreasing from $6.9 million a year ago.
Third-Quarter 2017 Outlook
Total revenue is likely to decline approximately 5–2% year over year.
The company expects earnings in the range of 18–23 cents per share.
At APUS, net course registrations by new students are expected to decrease between 18–14% on a year-over-year basis. Net course registrations are likely to decline between 11–8%.
Zacks Rank & Stocks to Consider
American Public Education currently carries a Zacks Rank #1 (Strong Buy). You can the complete list of today’s Zacks #1 Rank stocks here.
A few other top-ranked stocks in the same space are Bright Horizons Family Solutions Inc. (BFAM - Free Report) , GP Strategies Corporation (GPX - Free Report) and Grand Canyon Education, Inc. (LOPE - Free Report) , each carrying a Zacks Rank #2 (Buy).
Bright Horizons’ full-year 2017 earnings are expected to increase 22.9%.
GP Strategies’ 2017 earnings are expected to increase 8.5%.
Grand Canyon is expected to witness 20.4% growth in earnings in 2017.
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