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Why Yelp, UniFirst, and Apollo Education Group Tumbled Today

The S&P 500 climbed to a record high today as positive economic news on the labor front kept the stock market moving in an upward direction Wednesday. With news that private-sector employment gained 191,000 jobs during March, investors increasingly expect that the spring will bring a faster recovery for the economy after winter led to a temporary slowdown. Even with positive moves for stocks generally, though, Yelp (NYSE: YELP  ) , UniFirst (NYSE: UNF  ) , and Apollo Education Group (NASDAQ: APOL  ) suffered substantial losses that reflected their shareholders' discontent with recent news about the companies.

Yelp dropped 6% after the Federal Trade Commission revealed that it had received more than 2,000 complaints about the rating service covering the five years for which the government agency retains records. The Wall Street Journal, which made the information request from the FTC, hasn't yet disclosed the exact nature of the complaints. But earlier this week, a Los Angeles Times article noted the feeling among some merchant-customers that compared the sales practices that Yelp uses to extortion. After having seen its shares soar last year, Yelp needs to prevent negative publicity from affecting its business strategy if it wants to hold onto those gains.

UniFirst declined almost 10% after the uniform and business-services provider gave downbeat guidance in its quarter report this morning. Revenues for UniFirst's fiscal second quarter rose by 2.9%, but net income fell almost 4%. Although CEO Ronald Croatti cited solid results for UniFirst's core laundry business, he also said that its specialty garments and first-aid segments would contribute to lower expectations for the rest of the fiscal year. Moreover, with the company doing a substantial amount of business in Canada, weakness in the Canadian dollar has hurt UniFirst's results, and Croatti doesn't expect that to improve in the near future.

Source: Apollo Group.

Apollo Education Group fell 9% after the for-profit educator behind the University of Phoenix issued a troubling earnings report. Revenue plunged almost 19%, and although earnings came in ahead of expectations, enrollment figures for both new students and total student counts fell between 16% and 17%. The news follows similar poor performance from Bridgepoint Education (NYSE: BPI  ) in its report last month, in which it said total student enrollment declined 22%. The key question is whether enrollment figures throughout the industry will turn around, because without more students, Apollo and its peers will have a tough time renewing their past growth.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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9/4/2015 3:59 PM
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