American Public Education, Inc.’s APEI fourth-quarter adjusted earnings of 75 cents per share surpassed the Zacks Consensus Estimate of 54 cents by about 38.9%. Earnings were also significantly above management’s expected range of 51–56 cents.
Moreover, adjusted earnings per share surged 10.3% year over year. Fourth-quarter 2015 adjusted earnings per share excludes $2.3 million of net expenses related to the previously announced workforce realignment, and write-down of information technology and other assets.
Revenues & Enrollment
Total revenue came in at $85.9 million, surpassing the Zacks Consensus Estimate of $84 million by 2.3%. Although revenues recorded a 5.9% year-over-year decline, this was better than the company’s expected decline of 6–10%.
Revenues dropped 6% at American Public University System (APUS) to $78.2 million due to dismal enrollment trends.
Total enrollment at APUS slipped 9% to 92,300, owing to a decline in enrollment of students using FSA – a trend that has been persisting for the past few quarters.
The decline was, however, within management’s expected range of 8–10% decline. Also, new student enrollments (student starts) at APUS slumped 24% to 14,500, which was worse than the company’s expectations of a decline in the range of 19%–22%.
Quarterly revenues, enrollment levels and earnings were impacted by persistent volatility and softness in enrollment of students under the Federal Student Aid (FSA) and Tuition Assistance (TA) program. Quarterly results were also hurt by increased competition among students and greater focus on targeted advertising investments. Targeted advertising investments are intended for students with better eligibility for college education. Though this strategy improves the quality mix, enrollment levels get hurt initially.
New enrollment of students using FSA dropped 36%.
Total enrollment and new enrollment of students using TA fell 4% and 11%, respectively, owing to changes in the implementation of the program by the Department of Defense.
Though new enrollment of students using veteran benefits tumbled 8% year over year, total enrollment of students using veteran benefits inched up 2%.
Revenues at Hondros College of Nursing were $7.7 million, down 7.2% due to lower starts. Starts declined 10% owing to lower enrollment of the ADN program. Fewer students graduating from the practical nursing program led to the lower enrollment in the ADN program as these students are the primary source of new ADN students. However, total enrollment at the newly acquired Hondros College Nursing Programs (HCON) rose 3%.
Fiscal 2015
American Public Education’s fiscal 2015 adjusted earnings of $2.07 per share surpassed the Zacks Consensus Estimate of $1.87 by 10.7%. Adjusted earnings, however, plunged 11% year over year.
Total revenue came in at $327.9 million, beating the Zacks Consensus Estimate of $326 million by 0.6%. However, the top line fell 6.3%.
First-Quarter 2016 Outlook
The company has updated first-quarter 2016 guidance. Management expects total enrollments at APUS to decline in the range of 4–8%, while new enrollments are expected to decline 15–20%.
American Public Education expects revenues to record a 2–4% decline. Management further projects adjusted earnings per share between 47 cents and 52 cents. Management’s guidance was well above than Zacks Consensus Estimate of 41 cents.
Management projects new student enrollment at Hondros to decrease about 20%. Total student enrollment at Hondros is expected to fall about 6% during the quarter.
American Public currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the education industry include Capella Education Co. CPLA, Grand Canyon Education, Inc. LOPE and Lincoln Educational Services Corp. LINC. All the three companies have a Zacks Rank #2 (Buy).
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