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American Public (APEI) Up 117% in 3 Months on Solid Enrollment
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American Public Education, Inc. (APEI - Free Report) skyrocketed 117.4% in the past three months, backed by solid contributions from the American Public University System (“APUS”), Hondros College of Nursing segment (“HCN”) and Graduate School. Its focus on cost-saving initiatives and affordable tuition also bodes well.
The stock outperformed the Zacks Schools industry’s 17.8% growth and the S&P 500 index’s 8% rally. Its earnings surpassed the Zacks Consensus Estimates in the trailing three quarters with an average surprise of 23.2%.
APEI has seen an upward estimate revision for 2024 earnings to 54 cents per share from a loss of 16 cents over the past 60 days. This depicts analysts' optimism over the company’s prospects. The figure reflects a year-over-year increase of 115.8%. It has a VGM Score of A supported by a Value and Growth Score of A, which solidifies its growth potential.
American Public has been registering impressive enrollment growth at APUS and HCN. Net course registrations at APUS increased 8% year over year in third-quarter 2023, including 12% growth in active-duty military and nearly 5% in the veteran’s channel. Enrollment momentum continued for the 15th consecutive quarter at HCN, achieving 17% year-over-year growth in the third quarter.
APUS and HCN’s revenues increased 11% and 20%, respectively, year over year in the third quarter. The upside was backed by successful marketing efforts and the execution of enrollment strategies. Also, the increase in net course registrations and tuition and fee increases implemented in April and July added to the positive.
The APUS segment has been benefiting from the increase in military-related registrations from students utilizing TA and VA and increased tuition for nonmilitary students. HCN benefited from a strong demand for its PN and ADN nursing programs in the market. It witnessed strong performance in the new Detroit campus, most of its legacy campuses and further growth in Indianapolis due to raised caps.
Margin Expansion Moves
APEI has undertaken several initiatives to address increasing cost pressure. During the third quarter of 2023, it completed its previously announced operational improvements, including enhanced marketing efficiency and the right-sizing of the cost structure, both aligned with current levels of enrollment and revenues at Rasmussen.
During the third quarter, the company completed a reduction in force, terminating 74 employees and eliminating 57 open positions. This action is expected to yield approximately $15.5 million in annualized savings.
The headcount reductions align with ongoing efforts to restructure the organization, eliminate redundancies and optimize functions. APEI’s EBITDA margin expanded 570 basis points year over year to 12% in the third quarter of 2023. This positive trend in margin growth is expected to continue throughout the remainder of 2023, thanks to modest tuition increases combined with an increased focus on marketing spend and other costs.
Strategic Initiatives & Affordability
The company has undertaken several initiatives to improve enrollment trends and student persistence. It intends to drive students’ persistence rate by improving the quality of the student mix, releasing new tools for students and taking other initiatives that increase students’ engagement and classroom interactivity. APEI offers various competency-based education programs that, permit students to control their pace and progress in a program.
The firm has also adopted a geographical marketing approach, which focuses on using cost-effective channels and aims to reach out to college-ready students who are more likely to succeed. It also aims to strengthen its digital marketing campaigns to leverage relationships with the military, public service and other high-value student populations.
Since its foundation, affordable tuition has been a priority of APUS. Its affordable tuition helps students to take on comparably less debt. Tuition at APUS is currently among the lowest in the four-year for-profit sector.
This apart, APUS provides an APUS-funded tuition grant to undergraduate and master’s students to support its active-duty military students using TA. APUS’ low tuition and fees, in combination with APUS-funded tuition and book grants provided to all undergraduate students, active-duty military students and their spouses and dependents at the master’s level, lead to significant savings for students. Tuition and fees at Rasmussen University (“RU”) and HCN are also designed to be affordable and competitive with those of similar institutions offering the same level of flexibility, accessibility and student experience.
Focus on Nursing Programs
Currently, the U.S. healthcare sector is facing a severe talent shortage, impacting care quality and widening health disparities due to nursing departures and retirements during the pandemic. With 23 campuses, APEI's RU segment aims to bridge this gap by training new nurses. The firm is optimistic about its role in the healthcare ecosystem as it is dedicated to its mission for students, faculty and staff.
Other Key Picks
Some other top-ranked stocks in the same sector are:
Stride, Inc. (LRN - Free Report) sports a Zacks Rank #1. Stride has a trailing four-quarter earnings surprise of 44.3%, on average.
Stride’s earnings for fiscal 2024 are expected to rise by 34.7%.
Virco Mfg. Corporation (VIRC - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 188.6%, on average.
The Zacks Consensus Estimate for VIRC’s 2024 sales and earnings per share indicates a rise of 15.7% and 32.4%, respectively, from the year-ago period’s levels.
JAKKS Pacific, Inc. (JAKK - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 61.8%, on average.
The Zacks Consensus Estimate for JAKK’s 2024 sales calls for 3.6% growth from the year-earlier levels.
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American Public (APEI) Up 117% in 3 Months on Solid Enrollment
American Public Education, Inc. (APEI - Free Report) skyrocketed 117.4% in the past three months, backed by solid contributions from the American Public University System (“APUS”), Hondros College of Nursing segment (“HCN”) and Graduate School. Its focus on cost-saving initiatives and affordable tuition also bodes well.
The stock outperformed the Zacks Schools industry’s 17.8% growth and the S&P 500 index’s 8% rally. Its earnings surpassed the Zacks Consensus Estimates in the trailing three quarters with an average surprise of 23.2%.
APEI has seen an upward estimate revision for 2024 earnings to 54 cents per share from a loss of 16 cents over the past 60 days. This depicts analysts' optimism over the company’s prospects. The figure reflects a year-over-year increase of 115.8%. It has a VGM Score of A supported by a Value and Growth Score of A, which solidifies its growth potential.
Image Source: Zacks Investment Research
Let’s discuss the factors substantiating its Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Strong Contribution From APUS & HCN
American Public has been registering impressive enrollment growth at APUS and HCN. Net course registrations at APUS increased 8% year over year in third-quarter 2023, including 12% growth in active-duty military and nearly 5% in the veteran’s channel. Enrollment momentum continued for the 15th consecutive quarter at HCN, achieving 17% year-over-year growth in the third quarter.
APUS and HCN’s revenues increased 11% and 20%, respectively, year over year in the third quarter. The upside was backed by successful marketing efforts and the execution of enrollment strategies. Also, the increase in net course registrations and tuition and fee increases implemented in April and July added to the positive.
The APUS segment has been benefiting from the increase in military-related registrations from students utilizing TA and VA and increased tuition for nonmilitary students. HCN benefited from a strong demand for its PN and ADN nursing programs in the market. It witnessed strong performance in the new Detroit campus, most of its legacy campuses and further growth in Indianapolis due to raised caps.
Margin Expansion Moves
APEI has undertaken several initiatives to address increasing cost pressure. During the third quarter of 2023, it completed its previously announced operational improvements, including enhanced marketing efficiency and the right-sizing of the cost structure, both aligned with current levels of enrollment and revenues at Rasmussen.
During the third quarter, the company completed a reduction in force, terminating 74 employees and eliminating 57 open positions. This action is expected to yield approximately $15.5 million in annualized savings.
The headcount reductions align with ongoing efforts to restructure the organization, eliminate redundancies and optimize functions. APEI’s EBITDA margin expanded 570 basis points year over year to 12% in the third quarter of 2023. This positive trend in margin growth is expected to continue throughout the remainder of 2023, thanks to modest tuition increases combined with an increased focus on marketing spend and other costs.
Strategic Initiatives & Affordability
The company has undertaken several initiatives to improve enrollment trends and student persistence. It intends to drive students’ persistence rate by improving the quality of the student mix, releasing new tools for students and taking other initiatives that increase students’ engagement and classroom interactivity. APEI offers various competency-based education programs that, permit students to control their pace and progress in a program.
The firm has also adopted a geographical marketing approach, which focuses on using cost-effective channels and aims to reach out to college-ready students who are more likely to succeed. It also aims to strengthen its digital marketing campaigns to leverage relationships with the military, public service and other high-value student populations.
Since its foundation, affordable tuition has been a priority of APUS. Its affordable tuition helps students to take on comparably less debt. Tuition at APUS is currently among the lowest in the four-year for-profit sector.
This apart, APUS provides an APUS-funded tuition grant to undergraduate and master’s students to support its active-duty military students using TA. APUS’ low tuition and fees, in combination with APUS-funded tuition and book grants provided to all undergraduate students, active-duty military students and their spouses and dependents at the master’s level, lead to significant savings for students. Tuition and fees at Rasmussen University (“RU”) and HCN are also designed to be affordable and competitive with those of similar institutions offering the same level of flexibility, accessibility and student experience.
Focus on Nursing Programs
Currently, the U.S. healthcare sector is facing a severe talent shortage, impacting care quality and widening health disparities due to nursing departures and retirements during the pandemic. With 23 campuses, APEI's RU segment aims to bridge this gap by training new nurses. The firm is optimistic about its role in the healthcare ecosystem as it is dedicated to its mission for students, faculty and staff.
Other Key Picks
Some other top-ranked stocks in the same sector are:
Stride, Inc. (LRN - Free Report) sports a Zacks Rank #1. Stride has a trailing four-quarter earnings surprise of 44.3%, on average.
Stride’s earnings for fiscal 2024 are expected to rise by 34.7%.
Virco Mfg. Corporation (VIRC - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 188.6%, on average.
The Zacks Consensus Estimate for VIRC’s 2024 sales and earnings per share indicates a rise of 15.7% and 32.4%, respectively, from the year-ago period’s levels.
JAKKS Pacific, Inc. (JAKK - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 61.8%, on average.
The Zacks Consensus Estimate for JAKK’s 2024 sales calls for 3.6% growth from the year-earlier levels.