Shares of American Public Education APEI have rallied 65.3% so far this year, outperforming the 21.2% gain of the industry it belongs to. Also, the company has outperformed the industry in the 12-week and 52-week frame, giving the stock a Momentum Score of A. Strategic Initiatives, new courses and strong digital marketing campaigns bode well.
The company’s consistent bottom-line outperformance has lent the stock some momentum. American Public surpassed earnings estimates in seven out of the last 10 quarters.
Moreover, earnings estimates have risen over the past few weeks, indicating that sentiments on American Public Education are moving in the right direction. Over the last 30 days, the Zacks Consensus Estimate for 2018 earnings inched up 1.9% to $1.57 per share. Also, earnings estimates for 2019 rose 4.3% in the same time frame.
This positive trend signifies bullish analysts’ sentiments, and the company’s Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Let’s delve deeper into other factors that make this stock a lucrative pick.
What Makes APEI a Solid Bet?
Strategic Initiatives: The company has undertaken several initiatives to improve enrollment trends and student persistence. It intends to drive persistence rate by improving the quality of student mix, release new tools and other initiatives that increase engagement and classroom interactivity.
Hondros College made changes in its curriculum that are expected to drive student enrollments. Total enrollment in the Hondros College Nursing Programs increased 19% year over year to 2,040 students and new student enrollment rose 11% year over year.
The company adopted a geographical approach to marketing, which focuses on using cost-effective channels and aims to reach out to college-ready students. Also, it aims to strengthen digital marketing campaigns to leverage relationship with military, public service and other high-value student populations.
Valuation Looks Rational: American Public Education has a Value Style Score of B, putting it in the top 40% of all the stocks we cover from this perspective.
The company has a trailing 12-month Price-to-Earnings or P/E ratio of 30.4. This is quite cheap compared with the industry as well as the market at large. The current P/E for the industry and S&P 500 is at 20 and 56.2, respectively. Hence, its lower-than-market positioning hints at more upside in the quarters ahead.
Meanwhile, the company’s trailing 12-month Price-to-Sales or P/S ratio of 2.3 is lower than the industry’s 6.6x as well as S&P 500’s 3.3x.
VGM Score
American Public Education has a VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, make solid investment choices.
Other Stocks to Consider
A few other top-ranked stocks in the industry are Grand Canyon Education, Inc LOPE, Strayer Education, Inc STRA and Bright Horizons Family Solutions Inc BFAM.
All three companies carry a Zacks Rank #2. You can seeYou can see the complete list of today’s Zacks #1 Rank stocks here.
Grand Canyon’s earnings for 2018 are expected to increase 22%.
Strayer’s earnings for 2018 are expected to increase 29.6%.
Bright Horizons is expected to witness 17.1% growth in 2018 earnings.
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