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Apollo Education (APOL) Misses Earnings & Revenues in Q1

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Shares of post-secondary education company Apollo Education Group, Inc. dipped 0.4% in afterhours trading on Jan 9, after the release of its first-quarter fiscal 2017 results.

Notably, Apollo Education signed an agreement to be acquired by a consortium of investors for about $1.1 billion in Feb 2016. The deal is subject to necessary closing conditions.

Apollo Education’s adjusted earnings (excluding special items) of 14 cents per share in the first quarter of fiscal 2017 missed the Zacks Consensus Estimate of 19 cents by 26.3%. The bottom line also declined 54.8% year over year.
 
First-quarter fiscal 2017 net revenue of $484.5 million missed the Zacks Consensus Estimate of $494.6 million by 2.1%. Revenues also declined 17.3% from the prior-year quarter due to lower enrollments.

Adjusted EBITDA was $52.3 million during the quarter, down from $83.1 million in the prior-year quarter.

Segment Details

University of Phoenix (“UOP”) revenues declined 23.4% year over year to $354.3 million. Degreed enrollment increased 23.2% to 135,900 and new degreed enrollment decreased 17.6% to 20,200.

UOP enrollments have been sluggish for several quarters now due to regulatory challenges along with changes and competition in the higher education industry. The company adopted a transformation strategy for UOP to turn it into a “smaller, but better performing” university. However, the company doesn’t expect an improvement in enrollments before fiscal 2019.

Apollo Global reported net revenue of $121.2 million, up 5.1% year over year.  Apollo Global continues to expand in international markets, thereby providing support to the top line.

Other Schools reported revenues of $8.9 million in the first quarter of fiscal 2017, up 10.9% year over year.

Guidance

Owing to the upcoming merger, Apollo Education did not provide any update on its guidance.

Apollo Education Group, Inc. Price, Consensus and EPS Surprise

Upcoming Peer Releases

Strayer Education Inc. (STRA - Free Report) is expected to report fourth-quarter 2016 results on Feb 2.

Meanwhile, DeVry Education Group Inc. (DV - Free Report) and Universal Technical Institute, Inc. (UTI - Free Report) are expected to report second-quarter fiscal 2017 results on Feb 2.

DeVry and Strayer Education have a Zacks Rank #3 (Hold) while Universal Technical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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