Capella Boosts Share Buyback Program

Zacks

The board of directors of Capella Education Company (CPLA) recently raised its share repurchase authorization by $50 million. This increase is in addition to the $6 million remaining under the existing program as of Jun 30, 2013.  

The increase in the share repurchase authorization program indicates the company’s strong liquidity position. The company had $107.6 million of cash and cash equivalents as of June 30, 2013.

On Jul 23, Capella reported second quarter 2013 results. Its second quarter 2013 earnings of 83 cents a share surpassed the Zacks Consensus Estimate of 66 cents by 25.8% on the back of better-than-expected new enrollment and total enrollment in the quarter.

However, earnings declined 2.4% from the year-ago quarter due to year-over-year decreases in revenues and margins. Better-than-anticipated new enrollment and total enrollment, however, could not offset the year-over-year downward drift in earnings.

Like another education company Apollo Group Inc. (APOL), Capella has been witnessing volatile enrollment growth since the last few quarters. For the third quarter of 2013, Capella expects new enrollments to decline in a mid- to single-digit percentage range. Total enrollment is expected to dip 2% to 4% in the third quarter.

Revenues are expected to be flat to up 1% in the third quarter of 2013. Operating margin is expected to be in the range of 8% to 9% for the third quarter.

Capella carries a Zacks Rank #1 (Strong Buy).

Other education companies that are performing well are Grand Canyon Education, Inc. (LOPE) and TAL Education Group (XRS). Both these companies carry a Zacks Rank #2 (Buy).
 

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