Q1 Preview: New Enrollee Drop, Gainful Employment Focus for Apollo Group (APOL) Investors
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Price: $10.00 --0%
Financial Fact:
Instructional and student advisory: 260.7M
Today's EPS Names:
FRSB, DGICA, UXIN, More
Financial Fact:
Instructional and student advisory: 260.7M
Today's EPS Names:
FRSB, DGICA, UXIN, More
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Apollo Group (Nasdaq: APOL) is lower heading into their first quarter earnings report, expected out after the market closes today. Shares are down 5.1% this afternoon.
APOL is expected to report an EPS of $1.35 with revs of $1.26 billion. Last quarter, the University of Phoenix parent company reported an EPS of $1.31 on revs of $1.26 billion, both just about in-line with the consensus. Last year, in Q110, Apollo produced an EPS of $1.47 on revs of $1.27 billion, beating estimates calling for an EPS of $1.46 and revs of $1.23 billion.
APOL shares dropped 21.6% through the quarter, to $34.00 at the end of November. The stock is up 6.2% since then, and finished 36% lower in 2010.
A simple valuation puts APOL with a forward EPS of 8.1x FY12 EPS estimates, compared to 10.1x for Corinthian Colleges Inc. (Nasdaq: COCO), 8.8x at DeVry, Inc. (NYSE: DV), and 10.7x for Strayer Education Inc. (Nasdaq: STRA).
Data from Bloomberg has 9 analysts with a Buy on APOL, 15 with a hold, and none suggesting to Sell. The analyst price target average is $48, with a high of $69 and low of $35.
Summary
For-profit company shares are seeing weakness today following an announcement by Strayer that new enrollment for their Winter session fell 20% from last year. STRA shares fell over 20% on the news today, and the sentiment is spreading across the sector.
Deutsche Bank recently gave an update for timing on Gainful Employment (GE) criteria that will be placed on for-profits. DB thinks that the new regulations will be available later in January (and possibly spring), as opposed to a mid-January target which a U.S. Department of Education Director said in early December.
On GE, Deutsche says, "House Ed Chairman Kline has publicly called for Sec Duncan to "change his approach" to GE or face a potential legislative challenge ‐ but with a split Congress, this is an empty threat. The only hope for a major change to GE would be a compromise between the DoE and Republicans, but that is a low probability event, in our view."
Deutsche is looking for an EPS of $1.49. They have a Buy rating on the shares and a price target of $60.
Barrington Research expects an EPS of $0.92 with revs of $1.092 billion. New degreed enrollment is expected to fall 41% to 57,840 students and total degreed enrollment falling 10.6% to 407,485.
Barrington notes that while management's initiatives (mandatory orientation program, changes to admission personnel compensation structure, reduced reliance on third-party lead generation) may cause a drop in enrollment, revs and earnings in the near-term, a longer-term outlook is becoming increasingly positive as "these initiatives will invariably lead to an improvement in the overall student experience (better completion/graduation rates and, as such, better bad debt/default/repayment rates) and higher quality and more predictable/profitable results."
Apollo Group is expected to release their Q111 earnings on Monday, January 10, 2011, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of their release.
APOL is expected to report an EPS of $1.35 with revs of $1.26 billion. Last quarter, the University of Phoenix parent company reported an EPS of $1.31 on revs of $1.26 billion, both just about in-line with the consensus. Last year, in Q110, Apollo produced an EPS of $1.47 on revs of $1.27 billion, beating estimates calling for an EPS of $1.46 and revs of $1.23 billion.
APOL shares dropped 21.6% through the quarter, to $34.00 at the end of November. The stock is up 6.2% since then, and finished 36% lower in 2010.
A simple valuation puts APOL with a forward EPS of 8.1x FY12 EPS estimates, compared to 10.1x for Corinthian Colleges Inc. (Nasdaq: COCO), 8.8x at DeVry, Inc. (NYSE: DV), and 10.7x for Strayer Education Inc. (Nasdaq: STRA).
Data from Bloomberg has 9 analysts with a Buy on APOL, 15 with a hold, and none suggesting to Sell. The analyst price target average is $48, with a high of $69 and low of $35.
Summary
For-profit company shares are seeing weakness today following an announcement by Strayer that new enrollment for their Winter session fell 20% from last year. STRA shares fell over 20% on the news today, and the sentiment is spreading across the sector.
Deutsche Bank recently gave an update for timing on Gainful Employment (GE) criteria that will be placed on for-profits. DB thinks that the new regulations will be available later in January (and possibly spring), as opposed to a mid-January target which a U.S. Department of Education Director said in early December.
On GE, Deutsche says, "House Ed Chairman Kline has publicly called for Sec Duncan to "change his approach" to GE or face a potential legislative challenge ‐ but with a split Congress, this is an empty threat. The only hope for a major change to GE would be a compromise between the DoE and Republicans, but that is a low probability event, in our view."
Deutsche is looking for an EPS of $1.49. They have a Buy rating on the shares and a price target of $60.
Barrington Research expects an EPS of $0.92 with revs of $1.092 billion. New degreed enrollment is expected to fall 41% to 57,840 students and total degreed enrollment falling 10.6% to 407,485.
Barrington notes that while management's initiatives (mandatory orientation program, changes to admission personnel compensation structure, reduced reliance on third-party lead generation) may cause a drop in enrollment, revs and earnings in the near-term, a longer-term outlook is becoming increasingly positive as "these initiatives will invariably lead to an improvement in the overall student experience (better completion/graduation rates and, as such, better bad debt/default/repayment rates) and higher quality and more predictable/profitable results."
Apollo Group is expected to release their Q111 earnings on Monday, January 10, 2011, at approximately 4:00pm EST. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of their release.
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