The sort of education that Apollo Group
Still, its financial performance is looking pretty good. Revenue was up a bit less than 18% in the first quarter, while total enrollments were up by a similar amount. The operating margin improved a bit as well, and operating income was up 20%. One item of note, though, is that promotional expenses were up only 6% from last year.
There always seems to be a bit of controversy and consternation around for-profit education companies. Some of it ranges from downright unethical and/or illegal practices to more vague worries about enrollment, tuition, and so on. In the case of Apollo this quarter, I'm a little puzzled that the company believes that transferring Axia College from its Western International unit to the University of Phoenix unit could lead to revenue coming in 4% lower than previously believed.
I can understand why there would be some costs and disruptions (transferring faculty, getting regulatory clearances, and so forth), but the company pegged the EPS hit at 2% or less. So, is Apollo Group trying to stealthily lower guidance and find a convenient excuse, or is the company just being conservative? I'm skeptical, and some might say pessimistic, by nature, but I'll give Apollo management the benefit of the doubt for now.
I honestly never gave a whole lot of thought to owning Apollo shares, but I can't deny that it looks pretty enticing on a cash flow and earnings basis. Then again, DeVry
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).