Apollo’s Shareholders Getting Schooled

University of Phoenix parent company Apollo Group Inc. (NASDAQ:APOL) lowered its forecasts for student numbers and operating profit on Tuesday, citing changes in how it finds students, more competition from other schools, and the improving labor market, making for a less-than-stellar fiscal second quarter.

Its stock dropped $6.51 or 13 percent, to $44.89 in premarket trading.

Enrollments escalated for Apollo early on in the recession, as the weak economy and high unemployment rates made continuing education a more appealing option for job-seekers. But recent factors such as stricter government regulations, negative media reports have significantly affected registration.

The company also cut its operating profit outlook for its fiscal year, which ends in August. Apollo adjusted its operating profit expectations from $655-750 million to $625-725 million, excluding one-time items. Analysts polled by FactSet were predicting $746 million.

Apollo said it still expects revenue of $4.1 billion to $4.3 billion for the year, in line with analyst estimates.

Last month the for-profit education company reported that its net income took a 37 percent dive in its fiscal first quarter due to shrinking enrollments at the University of Phoenix.

The company expects new student enrollments to fluctuate for the rest of the year. Apollo will report its 2Q financial results on March 26.

Here’s how APOL stock is reacting to the news:

Apollo Group Inc. (NASDAQ:APOL): APOL shares recently traded at $45.08, down $6.32, or 12.3%. They have traded in a 52-week range of $37.08 to $58.29. Volume today was 9,680,882 shares versus a 3-month average volume of 1,836,470 shares. The company’s trailing P/E is 12.68, while trailing earnings are $3.53 per share.

To contact the reporter on this story: Lindsey Grossman at staff.writers@wallstcheatsheet.com

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