Strategic Initiatives, affordable courses and strong digital marketing campaigns bode well for American Public Education, Inc. APEI.
Recently, the company reported third-quarter earnings per share of 27 cents, which surpassed the Zacks Consensus Estimate by 28.6% while revenues beat the same by 2.9%. Notably, the company saw a sharp rally in its shares, gaining 25.6% since the third-quarter earnings release on Nov 7.
Also, earnings estimates for the fourth quarter and 2017 have increased 3.3% and 2.9%, respectively, over the last 60 days, reflecting analysts optimism over this Zacks Rank #1 (Strong Buy) stock.
Key Growth Drivers
The company has undertaken several initiatives to improve enrollment trends and student persistence. The company intends to drive student’s persistence rate by improving the quality of the student mix and other initiatives that increase students’ engagement and classroom interactivity.
Hondros has also brought about changes in its curriculum that are expected to drive student enrollments. Total student enrollment rose 11% while new student enrollment increased 58% year over year in the third quarter of 2017.
Meanwhile, the company is focused on major initiatives to stabilize enrollment at American Public University System or APUS. Firstly, it is focused to reengineer the enrollment management processes by refining its marketing strategies with predictive modeling techniques, create greater engagement with prospective students. It is also focused on sharpening its digital marketing campaigns to leverage relationships with military and other high-value student population. The company also intends to continue expanding program offerings in areas where demand is growing and employers struggle to find suitable candidates to fill job openings.
Weak Enrollment Trends
APUS sales and enrollment trends are being affected by persistent volatility and softness in enrollment by students using Federal Student Aid (FSA) and Military Tuition Assistance (TA) for the past few quarters. In the third quarter, total net course registration at APUS declined 4% year over year, while net course registrations by new students fell 5% during the period.
Notably, total revenues are likely to decline 5-1% year over year in the fourth quarter of 2017, narrower than the 8.5% decline reported in the prior-year quarter.
The company expects earnings in the range of 29-34 cents per share,
At APUS, net course registrations by new students are expected to decline 12-8% on a year-over-year basis, compared with a 29% decline in the prior-year quarter. Total net course registrations are likely to decline 8-4%, narrower than a 10% decline in the prior-year quarter.
Other Stocks to Consider
A few other top-ranked stocks in the industry are TAL Education Group TAL, Bright Horizons Family Solutions Inc. BFAM and Grand Canyon Education, Inc. LOPE.
All three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fiscal 2018 earnings for TAL Education are expected to increase 68.2%.
Bright Horizons is expected to witness 22.6% growth in 2017 earnings.
Grand Canyon is likely to see a 21.9% rise in 2017 earnings.
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