For a firm that attracts so much attention on Wall Street, online for-profit educator Capella (NASDAQ:CPLA) sure doesn't get a lot of press. Eight analysts follow Capella -- as much coverage as little-known Motley Fool Hidden Gems pick Universal Technical Institute (NYSEL UTI) garners, more than name brands like Laureate (NASDAQ:LAUR) and Lincoln Tech (NASDAQ:LINC) get, and nearly as much interest as we see for ITT (NYSE:ESI) and Corinthian Colleges (NASDAQ:COCO).

And yet it's been nearly three trading days since Capella reported Q2 earnings last week, and not a single major news outlet has let forth a do-re-mi about its numbers. Hey, maybe I'm not the only one to just discover the existence of this stock! But if the company keeps on posting numbers like it did last week, I expect the secret won't remain secret much longer. Here's a quick rundown:

  • Both revenues and total active student enrollment grew 24%.
  • Operating margins expanded 140 basis points versus last year's Q2, to 11.1%.
  • Net profits exploded -- up 55% as the company tweaked its tax planning to minimize Uncle Sam's share of the lucre.

The bad news
Basically, the news looked pretty good. Even the fact that the firm's profits per diluted share didn't keep up with net profits growth doesn't worry me. The former fell shy of the latter only because Capella's share count grew between its pre- and post-IPO periods (plus a few more shares added through a follow-on stock offering).

But that's not to say there was no bad news whatsoever. There was. Free cash flow -- the measure of a firm's cash profitability, as opposed to the accounting profits described under GAAP -- is headed in entirely the wrong direction. So far this year, Capella has generated $3.7 million in free cash flow. Not only is that just a fraction of the firm's reported net profit under GAAP -- it's also 18% lower than in the first half of 2006.

More good news
That said, the firm still has some time to improve its performance this year, and it may yet do so. Capella updated its fiscal year earnings guidance to call for somewhere between 11.5% and 12.5% operating margins on 22.5%-23.5% revenue growth. Both ranges suggest slightly better operational performance than Capella had been promising last quarter. Let's just hope this improved performance is reflected on the firm's cash flow statement in quarters to come.

Speaking of which, Capella, we wouldn't mind seeing a full cash flow statement in future earnings releases. If it's not too much trouble.

What else do we know about Capella? Not a whole lot, directly -- but we do know that one of the best stock shops of Wall Street likes it. Find out why here. And find out just how good a stock picker BMO Capital Markets is here.

Fool contributor Rich Smith does not own shares of any company named above.