The 10-second takeaway
For the quarter ended May 31 (Q3), Apollo Group missed estimates on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank significantly. Non-GAAP earnings per share shrank. GAAP earnings per share dropped significantly.
Gross margins were steady, operating margins contracted, net margins dropped.
Apollo Group reported revenue of $946.8 million. The 12 analysts polled by S&P Capital IQ expected to see a top line of $966.1 million on the same basis. GAAP reported sales were 16% lower than the prior-year quarter's $1.13 billion.
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 $1.05. The 14 earnings estimates compiled by S&P Capital IQ predicted $0.85 per share. Non-GAAP EPS of $1.05 for Q3 were 13% lower than the prior-year quarter's $1.20 per share. GAAP EPS of $0.71 for Q3 were 37% lower than the prior-year quarter's $1.13 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 58.4%, much about the same as the prior-year quarter. Operating margin was 20.6%, 40 basis points worse than the prior-year quarter. Net margin was 8.4%, 350 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $824.9 million. On the bottom line, the average EPS estimate is $0.24.
Next year's average estimate for revenue is $3.66 billion. The average EPS estimate is $2.83.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 791 members out of 937 rating the stock outperform, and 146 members rating it underperform. Among 246 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 197 give Apollo Group a green thumbs-up, and 49 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Apollo Group is hold, with an average price target of $22.38.
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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 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.