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Shares of K12 (NYSE:LRN) shot more than 25% higher in early trading on Thursday after the for-profit online primary and secondary school operator reported fiscal second-quarter results above Wall Street's expectations.
Why it's happening
K12's revenue was $231.3 million for the quarter, which produced earnings of $0.33 per share. Both results topped Wall Street analyst projections -- the consensus had called for $229.6 million in revenue and $0.29 in EPS. The company's total net enrollment grew by 1,183 students from the year-ago period, with growth in non-managed programs (up by 5,919) more than offsetting a decline in managed program enrollment (down by 4,736).
K12 now expects to generate revenue in the range of $230 million to $240 million for its fiscal third quarter, with operating income ranging from $20 million to $24 million. K12's operating income was $20.5 million for the second quarter, so the company could feasibly report earnings in the range of $0.32 to $0.35 for the third quarter, if its bottom line moves at a similar rate to its top line. These estimates look a little low compared to the current consensus, which calls for $239.3 million in revenue and $0.37 in EPS. However, investors seem content to cheer today's beat after enduring a long slide that's seen their shares lose 38% of their value in the past year, even after accounting for today's pop.
Alex Planes has no position in any stocks mentioned. The Motley Fool recommends 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.