The 10-second takeaway
For the quarter ended Sep. 30 (Q1), K12 met expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share contracted.
Gross margins grew, operating margins dropped, net margins contracted.
K12 recorded revenue of $221.1 million. The five analysts polled by S&P Capital IQ anticipated revenue of $221.7 million on the same basis. GAAP reported sales were 14% higher than the prior-year quarter's $193.3 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 $0.11. The six earnings estimates compiled by S&P Capital IQ anticipated $0.13 per share. GAAP EPS of $0.11 for Q1 were 8.3% lower than the prior-year quarter's $0.12 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 46.3%, 190 basis points better than the prior-year quarter. Operating margin was 3.9%, 40 basis points worse than the prior-year quarter. Net margin was 2.0%, 40 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $204.4 million. On the bottom line, the average EPS estimate is $0.21.
Next year's average estimate for revenue is $849.4 million. The average EPS estimate is $0.70.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 171 members out of 194 rating the stock outperform, and 23 members rating it underperform. Among 48 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 40 give K12 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 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.