American Public Education Inc : Barrington Research Raises Target Price To $24 From $18

American Public Education, Inc.’s APEI stock plunged 7.6% in the after-hour trading session after it reported mixed results for third-quarter 2024. Its earnings handily beat the Zacks Consensus Estimate and improved from the previous year.

Revenues missed the analysts’ expectations but increased year over year on the back of contributions from the American Public University System (“APUS”), Hondros College of Nursing (“HCN”) and Rasmussen University ("RU") segments. Yet, lower revenues from Graduate School ("GSUSA") partially offset the growth.

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APEI has been benefiting from consistent enrollment growth at APUS and HCN, along with improvement at RU, which saw its first enrollment growth in the third quarter since the acquisition of the business. The company expects to witness continued momentum across the segments in the fourth quarter.

Delving Deeper

APEI reported adjusted earnings per share (EPS) of 4 cents, beating the Zacks Consensus Estimate of 1 cent by 300% and increasing 100% from 2 cents reported a year ago.

American Public Education, Inc. Price, Consensus and EPS Surprise

American Public Education, Inc. price-consensus-eps-surprise-chart | American Public Education, Inc. Quote

Total revenues of $153.1 million missed the consensus mark of $153.6 million by 0.3% but grew 1.5% from the year-ago period on strong segmental results.

Total costs and expenses increased 3.2% year over year to $149 million. Adjusted EBITDA decreased 28.7% year over year to $12.9 million. Adjusted EBITDA margin of 8% contracted from 12% year over year.

Segment Discussion

APUS: Revenues of $77 million grew 0.8% from the year-ago period’s levels of $76.4 million. APUS has delivered consistent year-over-year growth in net course registrations driven by modest increases in registrations and targeted tuition and fees.

APUS’ total net course registration inched up 0.2% from the year-ago period to 92,500. Adjusted EBITDA margin of 29% contracted from 30% year over year.

RU: The segment reported revenues of $52.6 million for the quarter, up 1% from a year ago. The increase was primarily due to an increase in tuition rates effective in the first quarters of 2023 and 2024 for select programs. This was partially offset by a change in the mix of total student enrollment, resulting in a 6.3% decrease in on-ground enrollment, partially offset by a 4.2% increase in online enrollment, which has a lower revenue per student compared with the prior-year period.

RU’s total student enrollment remained flat year over year to 13,500. On-ground enrollment was 6,000, and online enrollment was 7,500 students. Adjusted EBITDA margin of negative 9% narrowed from negative 10% reported in the prior-year quarter.

HCN: The segment’s revenues rose 12.8% year over year to $15.5 million, backed by solid growth in tuition. Total student enrollment at HCN increased 10.4% from the prior-year quarter’s levels to 3,100. Adjusted EBITDA margin was negative 2%, flat year over year.

Corporate and other: It includes tuition and contract training revenues earned by GSUSA and eliminates intersegment revenues for courses taken by employees of one segment at other segments. The segment’s revenues decreased 14% year over year to $8.04 million impacted by government spending uncertainty. GSUSA revenues fell 6.3% year over year.

Adjusted EBITDA margin came in at negative 100% against 18% a year ago.

Financials

At the end of the third quarter, American Public had total cash, cash equivalents, and restricted cash of $162.2 million, up from $144.3 million at 2023-end.

Q4 Guidance

APEI expects total revenues to increase 4-8% year over year to $159-$164 million. It anticipates EPS between 47 cents and 56 cents, down 13-26% year over year. Adjusted EBITDA is expected to be within $23-$26 million, reflecting a decline of 10% to a growth of 2% year over year.

APUS’ total net course registrations are likely to be 94,400-96,100, reflecting 4-6% growth year over year. HCN’s total enrollment is expected to increase 19% from the prior-year figure to 3,700 students.

RU’s student enrollment is expected to be up 4% from the year-ago quarter’s figure of 14,600. On-ground student enrollment is likely to decline 3% to 6,300, while Online student enrollment is expected to rise 9% year over year to 8,300.

2024 Guidance Updated

APEI has reduced the upper limit of the previously guided range for total revenues to $620-$625 million from $620-$630 million. This reflects growth of 3-4% compared with previous range of 3-5% year over year.

The company has also narrowed its adjusted EBITDA guidance to $64-$67 million (compared with the prior projection of $60-$70 million), reflecting 7-12% growth (compared with the prior expectation of 1-17%) year over year.

Capital expenditures are now expected to be in the range of $19-$22 million, up from $17-$20 million expected earlier. The new range reflects 37-58% growth compared with 22-44% expected earlier.

Zacks Rank & Peer Releases

APEI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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