The 10-second takeaway
For the quarter ended Dec. 31 (Q2), Education Management met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue increased slightly and GAAP earnings per share shrank significantly.
Margins dropped across the board.
Education Management tallied revenue of $682.1 million. The 12 analysts polled by S&P Capital IQ hoped for net sales of $677.7 million. Sales for the prior-year quarter were $666.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.24. The 12 earnings estimates compiled by S&P Capital IQ predicted $0.21 per share on the same basis. GAAP EPS of $0.49 for Q1 were 20% lower than the prior-year quarter's $0.61 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 48.9%, 260 basis points worse than the prior-year quarter. Operating margin was 17.6%, 510 basis points worse than the prior-year quarter. Net margin was 8.6%, 240 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $744.9 million. On the bottom line, the average EPS estimate is $0.46.
Next year's average estimate for revenue is $2.82 billion. The average EPS estimate is $1.34.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 34 members out of 58 rating the stock outperform, and 24 members rating it underperform. Among 17 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), nine give Education Management a green thumbs-up, and eight 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 $20.10.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.