The 10-second takeaway
For the quarter ended Sep. 30 (Q1), Education Management met expectations on revenues and exceeded expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped and GAAP earnings per share dropped to a loss.
Margins contracted across the board.
Education Management chalked up revenue of $609.6 million. The 12 analysts polled by S&P Capital IQ expected a top line of $614.0 million on the same basis. GAAP reported sales were 11% lower than the prior-year quarter's $682.1 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 -$0.04. The 11 earnings estimates compiled by S&P Capital IQ predicted -$0.08 per share. GAAP EPS were -$0.11 for Q1 against $0.21 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 37.4%, 1,400 basis points worse than the prior-year quarter. Operating margin was 1.6%, 960 basis points worse than the prior-year quarter. Net margin was -2.1%, 610 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $668.3 million. On the bottom line, the average EPS estimate is $0.19.
Next year's average estimate for revenue is $2.54 billion. The average EPS estimate is $0.50.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 34 members out of 62 rating the stock outperform, and 28 members rating it underperform. Among 17 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), six give Education Management a green thumbs-up, and 11 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 $5.19.
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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. 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.