Why Apollo Group Will Underperform in 2013

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, education provider Apollo Group (NASDAQ: APOL  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Apollo and see what CAPS investors are saying about the stock right now.

Apollo facts

Headquarters (Founded)

Phoenix (1973)

Market Cap

$2.4 billion

Industry

Education services

Trailing-12-Month Revenue

$4.3 billion

Management

CEO Gregory Cappelli (since 2012)
CFO Brian Swartz (since 2009)

Return on Equity (Average, Past 3 Years)

38.8%

Cash/Debt

$1.3 billion / $719.9 million

Competitors

Corinthian Colleges (NASDAQ: COCO  )
DeVry
(NYSE: DV  )
Education Management
(NASDAQ: EDMC  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 16% of the 949 members who have rated Apollo believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, knam, succinctly summed up the Apollo bear case for our community:

[A]bout 90% of their revenue is from government grants and loans. Any investor knows that what the government gives, they can take away. Look at solar energy as an example! Students who attend for-profit universities have higher unemployment rate, higher drop out rate, and receive about 8-10% less income compared to similar students who attended non-profit universities. ... Compared to their counterparts who attend non-profit universities, they face a TERRIBLE life. Though they were able to enroll a lot of students before, with a lot more education and resources out there, it will be harder to enroll more students in the future.

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