Continuing Education, Domestic, For-Profit, Investors, Required, University & College - Written by on Wednesday, August 3, 2011 9:33 - 0 Comments

American Public Education Inc. Inspires Sector with Guidance 30% Higher YOY Q3 Earnings

photo: courtesy American Public Education

by Elbert Chu



American Public Education Inc. (NASDAQ: APEI) based in Charles Town, WV reported enrollments grew 34% year over year, compared to CPLA and STRA who have seen persistence weakness.

UBS analyst Ariel Sokol, who is bullish on APEI shares with a “Buy” rating and a $52 price target, writes:

American Public reported the cleanest quarter of any publicly traded postsecondary company that we cover this earnings season.  Enrollment growth accelerated to 34% YoY from 28%.  Revenue growth exceeded investor expectations and management guidance.  At the same time, selling & promotional costs as a percent of revenue declined YoY (rather than increased).  The bear thesis on this story for some time has been that the company would need to continually increase sales & promotional costs as a percent of revenue as it penetrated the civilian market.  The thesis did not play itself out this quarter, as selling & promotional costs declined YoY, to 16% from 17.6% in the prior year quarter.

Still, American Public Education and other for-profit companies may encounter a drag on growth if there are changes to the level of federal government assistance. Sokol writes:

On the call, management commented that the Department of Defense could potentially modify tuition assistance given austerity measures by the federal government.  Active duty service members could need to pay out of pocket, use Title IV, or other funds to cover tuition costs.


Full earnings numbers broken out at Reuters.

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