Apollo Education Group Inc (NASDAQ:APOL) plans to release its fiscal-year (FY) 2014 second quarter financial results after the market closes on Tuesday, April 1, 2014. Following the news release, Apollo management will host a conference call beginning at 5:00 p.m. EST to review results.
Wall Street anticipates that the dot EDU will earn $0.19 per share for the quarter, which is $0.15 less than last year's profit of $0.35 per share. iStock expects APOL to hit Wall Street's consensus number. The iEstimate is $0.19; however, there might be downside risk as the most recent analysts estimate is just $0.13.
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While the most recent consensus is way less than the consensus, two analysts have upped their outlook within the last 30-days for the online educator – maybe they balance out with an on-target result?
Sales, like earnings, are expected to fall 17.4% year-over-year. Apollo's consensus revenue estimate for Q4 is $689.04 million, down from last year's $834.37 million.
Apollo Education Group is a private education provider. The Company offers educational programs and services both online and on-campus at the undergraduate, master's and doctoral levels through its wholly owned subsidiaries.
You probably know Apollo as the University of Phoenix, but APOL also operates the Institute for Professional Development (IPD); The College for Financial Planning Institutes Corporation (CFFP), and Meritus University, Inc. (Meritus).
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Management will have plenty of concerns to address Tuesday afternoon. Because of declining enrollment and costs, the company is in the process of shutting 115 of its ground locations, 85% of which was complete by the end of Q1.
For the first quarter, New Degreed Enrollment was down 22.9%. Wall Street will be watching the enrollment figures, as well as the school's Student Loan Cohort Default Rates, and compliance with the 90/10 rules (In a nutshell, less than 90% of the school's revenue has to come from something other than federal assistance via loans, grants, and federal work study.)
To be eligible for Title IV funds, a school's default rate cannot exceed 40% in any given year or 30% for a three year rolling period. Last quarter's three-year default rate was 26%. Management doesn't expect to either to be violated during FY 2014.
The last serious concern comes from the Higher Learning Commission Accreditation Reaffirmation, which has placed Apollo's accreditation on notice. Notice status is a sanction that means that HLC has determined that an institution is on a course of action that, if continued, could lead the institution to be out of compliance with one or more of the HLC Criteria for Accreditation or Core Components.
Apol is on a month-to-month basis until a final decision is made.
If APOL fails on any of these fronts, the stock is going to get whacked. However, if 90/10 and default numbers improve, Wall Street is likely to rejoice.
Based Google Trends for the keyword "Phoenix University," iStock expects to see enrollment fall 5.3% in Q2 relative to Q1, which could be viewed by investors as stabilizing enrollment rates.
As you can see, there are plenty of potential potholes for Apollo to blow out a tire for Tuesday's announcement. Option traders appear to be betting, albeit slightly, that APOL will be able to navigate the dangers successfully.
Friday's call option volume outpaced put volume by almost 4:1; however, open interest is more evenly split, which could mean most of Friday's call volume was closing out open positions.
Overall: Apollo Education Group Inc (APOL) has too many opportunities to earn a failing grade Tuesday afternoon. Investors might think about straddling EPS news with options as shares moved in excess of 9% five of the last six quarterly announcements, but we would be willing to own the stock outright, too many things can go wrong.
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