The 10-second takeaway
For the quarter ended June 30 (Q4), K12 beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share expanded. The non-GAAP profit was a surprise, as analysts had predicted a loss.
Gross margins increased, operating margins dropped, net margins increased.
K12 recorded revenue of $170.4 million. The six analysts polled by S&P Capital IQ anticipated sales of $165.4 million on the same basis. GAAP reported sales were 33% higher than the prior-year quarter's $128.3 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 $0.05. The six earnings estimates compiled by S&P Capital IQ forecast -$0.04 per share. GAAP EPS were $0.04 for Q4 compared to -$0.08 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 39.8%, 70 basis points better than the prior-year quarter. Operating margin was 1.2%, 140 basis points worse than the prior-year quarter. Net margin was 1.1%, 330 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $233.0 million. On the bottom line, the average EPS estimate is $0.20.
Next year's average estimate for revenue is $854.7 million. The average EPS estimate is $0.70.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 174 members out of 195 rating the stock outperform, and 21 members rating it underperform. Among 49 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 44 give K12 a green thumbs-up, and five give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on K12 is outperform, with an average price target of $28.50.
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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. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend K12. 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.