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Why Is American Public (APEI) Up 7.8% Since the Last Earnings Report?
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It has been about a month since the last earnings report for American Public Education, Inc. (APEI - Free Report) . Shares have added about 7.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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.
American Public Misses Q4 Earnings, Enrollment Down
American Public Education delivered fourth quarter adjusted earnings of $0.42 per share which missed the Zacks Consensus Estimate of $0.44 by 4.5%. Adjusted earnings also declined 30% year over year due to declining revenues.
Revenues and Enrollment
Total revenue of $78.6 million missed the Zacks Consensus Estimate of $81 million by 2.9%. Revenues also decreased 8.5% year over year owing to declining revenues at both American Public University System (“APUS”) and Hondros College of Nursing.
American Public University System: Revenues dropped 9.1% to $71.1 million from $78.1 million in the prior-year period due to a decrease in net course registrations.
Net course registrations at APUS fell 10% from the prior-year period. This was primarily due to a decrease in net course registrations by new students using Federal Student Aid (“FSA”) and military tuition assistance (“TA”).
Net course registrations by new students declined 29%, while net course registrations by returning students decreased 7%, both on a year-over-year basis.
Net course registrations of new students using FSA plunged 46%. The downside may be attributed to the company’s efforts to improve its quality mix of students, adjustments to its marketing efforts and increasing competition for online students.
Completion rates of undergraduate students using FSA at APUS increased approximately 19% year over year.
Net course registrations using TA was down 19%, largely due to changes in the TA program by the Department of Defense.
New enrollment of students using veteran benefits slipped 3%, while enrollment of students using cash and other sources declined 10%, both on a year-over-year basis.
Hondros College of Nursing: Revenues at fell 2.5% to $7.5 million from $7.7 million in the prior-year quarter. This was mainly due to lower enrollment trends.
Total enrollment at the Hondros College Nursing Programs declined approximately 13% year over year to 1,710 students, while new student enrollment increased approximately 1% year over year. This marks the first year-over-year enrollment increase.
Inside the Headline Numbers
Operating income plunged 28% to $11.3 million.
Costs and expenses decreased 4% year over year to $67.4 million in the quarter.
Selling and promotional or S&P as a percentage of revenues increased to 18.4%, from 17.7% in the prior-year period. This is due to S&P costs decreasing at a rate lower than the decline in revenues.
Financials
As on Dec 31, 2016, total cash and cash equivalents were approximately $146.4 million compared with $105.7 million as of Dec 31, 2015. Capital expenditures were approximately $13.8 million as of Dec 31, 2016, compared with $26 million in the prior-year period.
First-Quarter 2017 Outlook
American Public Education anticipates first-quarter 2017 consolidated revenues to decrease approximately 12–10% year over year.
The company expects earnings in the range of $0.25 to $0.30 per share.
At APUS, net course registrations by new students are expected to decrease between 25% and 19% on a year-over-year basis. Net course registrations are expected to decline between 11% and 9% year over year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 34.1% due to these changes.
American Public Education, Inc. Price and Consensus
At this time, American Public's stock has a subpar Growth Score of 'D', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.
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Why Is American Public (APEI) Up 7.8% Since the Last Earnings Report?
It has been about a month since the last earnings report for American Public Education, Inc. (APEI - Free Report) . Shares have added about 7.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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.
American Public Misses Q4 Earnings, Enrollment Down
American Public Education delivered fourth quarter adjusted earnings of $0.42 per share which missed the Zacks Consensus Estimate of $0.44 by 4.5%. Adjusted earnings also declined 30% year over year due to declining revenues.
Revenues and Enrollment
Total revenue of $78.6 million missed the Zacks Consensus Estimate of $81 million by 2.9%. Revenues also decreased 8.5% year over year owing to declining revenues at both American Public University System (“APUS”) and Hondros College of Nursing.
American Public University System: Revenues dropped 9.1% to $71.1 million from $78.1 million in the prior-year period due to a decrease in net course registrations.
Net course registrations at APUS fell 10% from the prior-year period. This was primarily due to a decrease in net course registrations by new students using Federal Student Aid (“FSA”) and military tuition assistance (“TA”).
Net course registrations by new students declined 29%, while net course registrations by returning students decreased 7%, both on a year-over-year basis.
Net course registrations of new students using FSA plunged 46%. The downside may be attributed to the company’s efforts to improve its quality mix of students, adjustments to its marketing efforts and increasing competition for online students.
Completion rates of undergraduate students using FSA at APUS increased approximately 19% year over year.
Net course registrations using TA was down 19%, largely due to changes in the TA program by the Department of Defense.
New enrollment of students using veteran benefits slipped 3%, while enrollment of students using cash and other sources declined 10%, both on a year-over-year basis.
Hondros College of Nursing: Revenues at fell 2.5% to $7.5 million from $7.7 million in the prior-year quarter. This was mainly due to lower enrollment trends.
Total enrollment at the Hondros College Nursing Programs declined approximately 13% year over year to 1,710 students, while new student enrollment increased approximately 1% year over year. This marks the first year-over-year enrollment increase.
Inside the Headline Numbers
Operating income plunged 28% to $11.3 million.
Costs and expenses decreased 4% year over year to $67.4 million in the quarter.
Selling and promotional or S&P as a percentage of revenues increased to 18.4%, from 17.7% in the prior-year period. This is due to S&P costs decreasing at a rate lower than the decline in revenues.
Financials
As on Dec 31, 2016, total cash and cash equivalents were approximately $146.4 million compared with $105.7 million as of Dec 31, 2015. Capital expenditures were approximately $13.8 million as of Dec 31, 2016, compared with $26 million in the prior-year period.
First-Quarter 2017 Outlook
American Public Education anticipates first-quarter 2017 consolidated revenues to decrease approximately 12–10% year over year.
The company expects earnings in the range of $0.25 to $0.30 per share.
At APUS, net course registrations by new students are expected to decrease between 25% and 19% on a year-over-year basis. Net course registrations are expected to decline between 11% and 9% year over year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 34.1% due to these changes.
American Public Education, Inc. Price and Consensus
American Public Education, Inc. Price and Consensus | American Public Education, Inc. Quote
VGM Scores
At this time, American Public's stock has a subpar Growth Score of 'D', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.