The 10-second takeaway
For the quarter ended Dec. 31 (Q2), Education Management met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped and GAAP earnings per share dropped significantly.
Margins shrank across the board.
Education Management reported revenue of $654.9 million. The 12 analysts polled by S&P Capital IQ expected to see revenue of $650.6 million on the same basis. GAAP reported sales were 11% lower than the prior-year quarter's $737.2 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 $0.25. The 11 earnings estimates compiled by S&P Capital IQ forecast $0.19 per share. GAAP EPS of $0.25 for Q2 were 49% lower than the prior-year quarter's $0.49 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 45.0%, 400 basis points worse than the prior-year quarter. Operating margin was 12.8%, 490 basis points worse than the prior-year quarter. Net margin was 4.8%, 380 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $630.7 million. On the bottom line, the average EPS estimate is $0.20.
Next year's average estimate for revenue is $2.47 billion. The average EPS estimate is $0.42.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 31 members out of 61 rating the stock outperform, and 30 members rating it underperform. Among 20 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), seven give Education Management a green thumbs-up, and 13 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 $4.22.
Looking for alternatives to Education Management? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.
- Add Education Management to My Watchlist.
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 position in any of the stocks mentioned. 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.