Apollo Education Group, Inc.’s APOL adjusted loss of 10 cents per share in the second quarter of fiscal 2015 was narrower than the Zacks Consensus Estimate of a loss of 16 cents per share. However, the bottom line compared unfavorably with the year-ago earnings of 30 cents per share.
Net revenue of $578.6 million lagged the Zacks Consensus Estimate of $584 million by 0.9% and the company’s expected range of $580 million to $595 million. Revenues declined 14% from the prior-year quarter due to lower enrollments.
Adjusted operating loss came in at $17.1 million due to lower revenues and dilution from Open Colleges and compared unfavorably with operating income of $47.5 million in the prior-year quarter. However, the operating loss was narrower than the company’s expected range of a loss of $25 million to $35 million.
Segment Details
University of Phoenix revenues declined 17.9% year over year to $487.8 million at the UOP due to a 14.6% decline in total enrollment to 213,800. New enrollment or starts at the UOP declined 12.9% year over year to 28,300.
Apollo’s enrollments have been sluggish for many quarters due to regulatory challenges and changes and competition in the higher education industry.
Apollo Global reported net revenue of $81.1 million, up 18.2% year over year. The segment has been benefiting from revenues from Open Colleges and Milpark acquisitions and improved enrollments in international markets.
In order to drive enrollment levels, some of the education companies are now acquiring other institutes in international markets, where the education market is relatively lucrative and there is demand for career-oriented courses. DeVry Education Group Inc. DV acquired two educational institutions in Brazil in Dec 2014 to further strengthen its foothold in the northern part of the country.
The Other Schools segment reported revenues of $9.7 million in the second quarter of fiscal 2015, down 3% year over year.
Third Quarter Fiscal 2015 Outlook
Management expects third-quarter fiscal 2015 revenues in the range of $690 million to $705 million. Operating loss is expected to range between $85 million to $95 million.
Fiscal 2015 Guidance
Based on the business trends in the second quarter of fiscal 2015, Apollo Education Group cut its guidance for fiscal 2015 once again.
Management expects fiscal 2015 revenues in the range of $2.63 billion to $2.68 billion, much lower than the prior expectation of $2.74 billion to $2.80 billion and representing a decline from fiscal 2014 levels. Adjusted operating income is expected to range between $200 million and $230 million, lower than the prior expectation of $250 million and $290 million.
Apollo Education Group carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the education industry include Universal Technical Institute, Inc. UTI and Grand Canyon Education, Inc. LOPE. While Universal Technical Institute sports a Zacks Rank #1 (Strong Buy), Grand Canyon Education holds a Zacks Rank #2 (Buy).
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