American Public Education (APEI) Down 13.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for American Public Education (APEI). Shares have lost about 13.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Public Education due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
American Public Q1 Earnings Beat Estimates
American Public Education, Inc. delivered a narrower-than-expected loss in first-quarter 2023. The bottom line surpassed the Zacks Consensus Estimate on the back of American Public University System (“APUS”) and Hondros College of Nursing segment (“HCN”) segments’ contributions, acquisitions and cost-saving moves.
Revenues, however, missed the analysts’ expectations and declined year over year.
Delving Deeper
The company reported an adjusted loss of 38 cents per share, narrower than the consensus mark of 45 cents by 15.6%. In the year-ago quarter, APEI reported earnings of 28 cents per share.
Total revenues of $149.7 million missed the consensus mark of $151 million by 1.1% and decreased 3.3% from the year-ago period’s levels. The downtrend was mainly attributable to the lower contribution from the Rasmussen University (“RU”) segment.
Total costs and expenses increased 3.7% year over year to $155.1 million due to higher instructional costs and services, selling and promotional expenses and general and administrative expenditures.
Adjusted EBITDA declined 59.7% year over year to $7 million.
Segment Discussion
APUS: Revenues of $74 million rose nearly 1% from the year-ago period’s levels of $73.1 million. APUS’ total net course registration increased 2% from first-quarter 2022 to a seven-year high level of 96,300. In the quarter, military registrations were up 7% and army registrations rose 6%.
RU: The segment reported revenues of $57.5 million for the quarter, down 14% from $67.1 million reported a year ago. RU’s total student enrollment fell 12% from the prior-year period’s levels to 14,300 due to a 19% decline in nursing and a 4% decline in non-nursing enrollment.
HCN: Segment’s revenues rose 14% year over year to $13.1 million. Total student enrollment at HCN increased 10% from the prior-year quarter’s levels to 2,700, marking an all-time high. The upside was backed by strong initial Detroit, MI, demand, which has benefited from word-of-mouth marketing.
Financials
At the end of first quarter, American Public had total cash and cash equivalents of $136.2 million from $129.6 million at the 2022-end.
Q2 Guidance
APEI expects total revenues to decline within 3-1% year over year to $145.5-$147.5 million. It anticipates an adjusted loss of 28-36 cents per share versus 6 cents reported a year ago. Adjusted EBITDA is expected to be within $4.4-$6.4 million, suggesting a decline of 56-70% year over year.
APUS’ total net course registrations are likely to be 85,300-88,700, reflecting growth of 2-6% year over year. HCN’s total enrollment is expected to increase 22% from the prior year’s tally to an all-time high of 3,000 students. RU’s student enrollment will likely fall 12.6% from the year-ago quarter’s figure to 13,900. Nursing student enrollment is likely to fall 22% to 6,400 and non-nursing student enrollment is expected to decline 3% to 7,500 year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 11.43% due to these changes.
VGM Scores
At this time, American Public Education has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, American Public Education has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
American Public Education belongs to the Zacks Schools industry. Another stock from the same industry, Adtalem Global Education (ATGE), has gained 1.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Adtalem reported revenues of $369.08 million in the last reported quarter, representing a year-over-year change of +1%. EPS of $1.13 for the same period compares with $0.87 a year ago.
Adtalem is expected to post earnings of $0.94 per share for the current quarter, representing a year-over-year change of -28.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -18.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Adtalem. Also, the stock has a VGM Score of A.
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