The 10-second takeaway
For the quarter ended March 31 (Q3), Education Management beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share shrank significantly. GAAP loss per share dropped.
Gross margins contracted, operating margins dropped, net margins grew.
Education Management logged revenue of $638.9 million. The 10 analysts polled by S&P Capital IQ expected a top line of $630.3 million on the same basis. GAAP reported sales were 9.1% lower than the prior-year quarter's $702.5 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.24. The nine earnings estimates compiled by S&P Capital IQ predicted $0.20 per share. Non-GAAP EPS of $0.24 for Q3 were 27% lower than the prior-year quarter's $0.33 per share. GAAP EPS were -$2.28 for Q3 versus -$3.31 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 45.2%, 80 basis points worse than the prior-year quarter. Operating margin was 12.8%, 60 basis points worse than the prior-year quarter. Net margin was -44.5%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $578.3 million. On the bottom line, the average EPS estimate is $0.00.
Next year's average estimate for revenue is $2.47 billion. The average EPS estimate is $0.42.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 30 members out of 61 rating the stock outperform, and 31 members rating it underperform. Among 17 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), six give Education Management a green thumbs-up, and 11 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Education Management is hold, with an average price target of $4.43.
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