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What: Shares of American Public Education (NASDAQ:APEI) weren't making the grade today, falling as much as 17% after guidance in its third-quarter earnings report failed to impress.
So what: Unlike a number of for-profit educators that have struggled recently, American Public Education actually showed solid growth in the quarter, with overall enrollment up 17% and revenues up 18%. EPS was even with a year ago at $0.60, but that beat expectations of just $0.50. Last year's figure was also boosted by $0.10 due to a tax credit. Guidance for the company, which specializes in education for military and other public service employees, came up short, though, as management said new-student course registration would decline in the fourth quarter and EPS should only be between $0.64 and $0.67 a share, below analyst estimates of $0.73.
Now what: The market often punishes underwhelming guidance after an earnings beat, and this example's no different. APE saw flat growth in new-student registration in the third quarter, so the decline it projects in the fourth is a little unnerving. New students are the lifeblood of this industry; if the company can't turn that trend around in the next few quarters, that should be a red flag for investors.
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Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool owns shares of American Public Education. Motley Fool newsletter services recommend American Public Education. 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.