American Public Education: Zacks’ Bear of the Day Play

American Public Education (APEIFree Report)  is an online provider of higher education focused primarily on serving the military and public service communities.  The company operates through two segments, American Public Education and Hondros College of Nursing. American Public Education was founded in 1991 and is headquartered in Charles Town, West Virginia. The stock is the Bear of the Day after being downgraded to a Zacks Rank #5 (Strong Sell) and after poor earnings outlook earlier in the month.

APEI has a market cap of $300 million and a forward PE of 10. The stock sports Zacks Style Scores of “F” in Momentum after the stock  lost a third of its value after their last earnings report.

Q2 results

The company reported Q2 EPS on August 9thth, with the numbers coming in at $0.41 verse the $0.39expected. Revenues came in above the expected at $76.7 million against the $75 million expected.

While the quarter saw a beat, the outlook was pretty terrible. The company guided Q3 $0.26-31 verse the $0.37 expected. The company also expects revenues to slow 3-6% year over year. Perhaps the worst part was the new course registration, which was down 22% from last year.

Investors sold the stock down 25% on the EPS miss. There has been no relief since as the stock continues lower, down almost 40% since earnings.

So is it time to buy? Looking at estimate revisions, the answer is no.

Estimate Revisions

Over the last 60 days, estimates have been revised lower for all time frames. For fiscal year 2016, the numbers have been taken down 10%, from $2.04 to $1.84. For 2017, estimates are now seen at $1.52, down from $1.97 or 22%.

Investors should look for the stock to continue to come under pressure until estimates turn around. However, with new course registration down so much, the company might continue to see revisions to the downside.

A Better Option

Lincoln Education (LINCFree Report) is a Zacks Rank #1 (Strong Buy) that is a leading and diversified for-profit provider of a career-oriented post-secondary education headquartered in West Orange, New Jersey. It offers bachelor’s degree, associate’s degree, and diploma and certificate programs in automotive technology, skilled trades, healthcare services, hospitality services, and business and information technology areas to recent high school graduates and working adults.

Lincoln has a market cap of $56 million and has expected EPS growth of 10%.

On August 8th, the company beat EPS by a penny and beat on revenue estimates. Revisions to earnings estimates have spiked higher over the last year.

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