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What: Shares of Capella Education (NASDAQ:CPLA) were looking smarter today, gaining as much as 20% after posting strong new enrollment numbers in its quarterly earnings report.
So what: Bucking a recent negative trend we've seen in the sector, the for-profit educator beat earnings estimates by $0.08 with a per-share profit of $0.70, though that was down from $0.82 a year ago. Revenue also declined slightly, by 3.8%, to $104.1 million, but that was essentially in line with estimates. Total enrollment fell 3.1%, but new enrollment, a key figure in the education industry, jumped 8.2% in the quarter, and the educator guided toward similar new enrollment growth in the current quarter.
Now what: Education stocks have gotten hammered over the past year or two as the Obama administration has cracked down on an industry that seems to take advantage of the government's student loan program and spends more on marketing than education. The new enrollment increase is a bullish sign for the industry, but it's still unclear if we'll see enrollment numbers returning to the level they were at just a few years ago. I'd like to see overall profits and revenues rising before being convinced of this sector's return.
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