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American Public (APEI) Runs Ahead of Peers: Up 23% in 3 Months

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American Public Education, Inc. (APEI - Free Report) is poised to benefit from affordable tuitions, online programs, strategic initiatives that are aimed at improving student success and strengthening digital marketing campaigns. Moreover, higher enrollment at Hondros College of Nursing or HCN is adding to the upside.

Notably, shares of the company have rallied 23.1% in the past three months compared with the industry’s 19.1% growth. The price performance was backed by a solid earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in the trailing 10 quarters. Notably, earnings estimates for 2020 have moved up by nearly 2% in the past 60 days, reflecting analysts’ optimism over the company’s earnings growth potential.

Let’s discuss the factors that substantiate the company’s Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Growth Catalysts

American Public Education has undertaken several initiatives to improve enrollment trends and student persistence. The company has also revised its application and assessment processes to effectively enroll more students with greater college readiness. Notably, it intends to drive persistence rate by improving the quality of the student mix, release new tools and other resources to enhance students’ engagement and classroom interactivity.

Other important initiatives lined up for the same purpose are APU mobile app and Civitas. Its competency-based programs — APUS Momentum — is also gaining traction. The company believes that improved students’ persistence will lead to enhanced online learning experience, increased graduation rates and higher referral rates.

Markedly, the company came up with certain changes in the curriculum at HCN to boost student enrollment. Other than Medical Laboratory Technician or MLT Program, it has started building a strong pipeline of Practical Nursing or PN students, which serves as the primary theater to Hondros Associate Degree in Nursing or AND program. The company is also planning to launch a new branding campaign and campuses by 2020.

Apart from the online programs, the company also increased tuition and book grants for active-duty soldiers who pursue undergraduate and master's level courses at American Public University System (APUS). The affordability of the courses and programs is expected to drive the company’s performance over the long term.

Other Key Picks

Some other top-ranked stocks in the same space are GP Strategies Corporation GPX, Bright Scholar Education Holdings Limited BEDU, and New Oriental Education & Technology Group Inc. EDU. GP Strategies sports a Zacks Rank #1, while Bright Scholar Education and New Oriental Education carry a Zack Rank #2 (Buy).

GP Strategies has three-five year expected earnings per share growth rate of 15%.

Bright Scholar Education and New Oriental Education’s 2020 earnings are expected to rise 33.3% and 36%, respectively.

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