Apollo Group Inc. Earnings: Margins Shrink with Revenues as Net Income Declines

S&P 500 (NYSE:SPY) component Apollo Group Inc. (NASDAQ:APOL) reported its results for the first quarter. Through its subsidiaries, Apollo Group offers innovative and unique educational programs and services both online and on-campus at the undergraduate, graduate, and doctoral levels.

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Apollo Group Earnings Cheat Sheet for the First Quarter

Results: Net income for Apollo Group Inc. fell to $149.3 million ($1.14 per share) vs. $236 million ($1.61 per share) a year earlier. This is a decline of 37% from the year earlier quarter.

Revenue: Fell 11.1% to $1.18 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: APOL reported adjusted net income of $1.28 per share. By that measure, the company beat the mean estimate of $1.18 per share. Analysts were expecting revenue of $1.16 billion.

Quoting Management: “Our strategic initiatives to further enhance the student experience and provide world-class student protections remain our focus,” said Apollo Group Co-Chief Executive Officer and Apollo Global Chairman Greg Cappelli. “We are also pleased to report positive new enrollment growth during the first quarter and improving trends in admissions advisor effectiveness, while reaching students who we believe can be successful in our degree programs.”

Key Stats:

Gross margins fell 4.4 percentage points to 61.2%. The contraction appeared to be driven by falling revenue, as the figure fell 11.1% from the year earlier while costs rose 0.2%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 9 cents in the fourth quarter of the last fiscal year, by 11 cents in the third quarter of the last fiscal year, and by 14 cents in the second quarter of the last fiscal year.

Revenue has fallen in the past four quarters. Revenue declined 10.9% to $1.12 billion in the fourth quarter of the last fiscal year. The figure fell 7.6% in the third quarter of the last fiscal year from the year earlier and dropped 2% in the second quarter of the last fiscal year from the year-ago quarter.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the second quarter is 44 cents per share, up from 42 cents ninety days ago. The average estimate for the fiscal year is $3.36 per share, a rise from $3.28 ninety days ago.

Competitors to Watch: Career Education Corp. (NASDAQ:CECO), DeVry Inc. (NYSE:DV), Corinthian Colleges, Inc. (NASDAQ:COCO), Strayer Education, Inc. (NASDAQ:STRA), Grand Canyon Education Inc (NASDAQ:LOPE), American Public Education, Inc. (NASDAQ:APEI), ITT Educational Services, Inc. (NYSE:ESI), National American Univ. Hldgs., Inc. (NASDAQ:NAUH), Bridgepoint Education, Inc. (NYSE:BPI), and Education Management Corp (NASDAQ:EDMC).

Stock Performance: Shares of APOL were down 0.7% from the previous close.

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com