A month has gone by since the last earnings report for American Public Education (APEI - Free Report) . Shares have lost about 2.4% 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 drivers. <p style="text-align: justify;"><strong>American Public Education (APEI - Free Report) Q2 Earnings Beat Estimates</strong><br /><br />American Public Education, Inc. reported second-quarter 2018 earnings per share of 39 cents, beating the Zacks Consensus Estimate of 33 cents. The reported earnings also increased 69.6% from the year-ago profit of 23 cents owing to solid cost management.<br /><br /><strong>Revenues and Enrollment</strong><br /><br />Total revenues of $72.8 million narrowly missed the consensus mark of $72.9 million. However, revenues grew 1% year over year. Higher contribution from Hondros College of Nursing (HCN) was partly offset by lower contribution from the American Public University System (APUS).<br /><br />The company operates through two segments — American Public Education or APEI segment and HCN segment.<br /><br /><strong>APEI </strong>primarily includes operational activities at APUS, other corporate activities, and minority investments.<br /><br />Revenues decreased 1% to $63.7 million due to a decline in enrollment and net course registrations by new students.<br /><br />During the quarter, total net course registration at APUS remained flat year over year and net course registrations by new students fell 1%. Student enrollment at APUS declined 4% year over year as of Jun 30, 2018.<br /><br /><strong>HCN </strong>revenues rose 15.4% to $9.1 million in the second quarter owing to higher enrollments.<br />Total enrollment in the HCN Programs increased 17% year over year to 2,020 students and new student enrollment rose 5% from the year-ago period.<br /><br /><strong>Inside the Headline Numbers</strong><br /><br />Income from operations before interest income and income taxes grew 27.4% to $8 million from $6.3 million in the prior-year quarter.<br /><br />APUS’ operating income amounted to $7.2 million, reflecting an increase of 26.6% year over year.<br /><br />On the other hand, HCN’s operating income grew 34.2% to $879 million in the quarter.<br /><br />Total costs and expenses declined 1.7% year over year to $64.8 million in the quarter.<br /><br /><strong>Financials</strong><br /><br />As of Jun 30, 2018, total cash and cash equivalents were approximately $193.6 million compared with $179.2 million on Dec 31, 2017.<br /><br />Capital expenditures were approximately $3 million in the first six months of 2018, down from $3.8 million a year ago. Net cash provided by operating activities amounted to $19.6 million in the said period compared with $16.3 million a year ago.<br /><br /><strong>Q3 Guidance</strong><br /><br />Total revenues are expected to decline 0-3% year over year.<br /><br />The company expects earnings in the range of 28-33 cents per share. This compares with 27 cents per share reported in the third quarter of 2017.</p>
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -22.22% due to these changes.
At this time, American Public Education has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, American Public Education has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.