The 10-second takeaway
For the quarter ended March 31 (Q3), Education Management beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue contracted and GAAP earnings per share contracted to a loss.
Margins shrank across the board.
Education Management logged revenue of $702.5 million. The 11 analysts polled by S&P Capital IQ predicted sales of $688.1 million on the same basis. GAAP reported sales were 6.9% lower than the prior-year quarter's $754.3 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 $0.33. The 11 earnings estimates compiled by S&P Capital IQ forecast $0.28 per share. GAAP EPS were -$3.31 for Q3 compared to $0.53 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 45.6%, 380 basis points worse than the prior-year quarter. Operating margin was 12.5%, 670 basis points worse than the prior-year quarter. Net margin was -59.4%, 6,910 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $631.0 million. On the bottom line, the average EPS estimate is $0.11.
Next year's average estimate for revenue is $2.74 billion. The average EPS estimate is $1.14.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 31 members out of 52 rating the stock outperform, and 21 members rating it underperform. Among 13 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), five 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 $19.40.
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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.