Apollo Education Profit Tops Estimates; Stock Down

(RTTNews) - Apollo Education Group Inc (APOL) Tuesday reported a higher second-quarter profit due to improved margins even as poor enrollments at its University of Phoenix continued to weigh on revenue. Adjusted earnings for the quarter topped Wall Street estimates, while revenue missed expectations.

Apollo reaffirmed its revenue guidance for 2014.

But investors were unimpressed with the announcement and Apollo shares sank 5 percent in after-hours trade on the Nasdaq.

A private education provider, Apollo has been grappling with lower enrollments for the past quarters due to regulatory challenges, competition in the higher education sphere and poor appetite for loans from students. Apollo is not alone as others like DeVry Education Group Inc (DV) also have seen weak enrollments.

But Apollo has managed to consistently top Street expectations due to cost cutting measures that included job cuts and campus closures.

In the second quarter, degreed enrollment at Apollo's University of Phoenix slid 16.8 percent from last year and new degreed enrollment was down 16.5 percent.

That was reflected in its revenue which declined to $679 million from $834.4 million in the prior-year second quarter. On average, 13 analysts polled by Thomson Reuters expected revenue of $689 million.

Meanwhile expenses for the quarter reduced to $672 million from $804.6 million a year ago. This was due to lower instructional and student advisory costs as well as reduced marketing admissions, restructuring and general expenses.

Also the recent quarter had a tax benefit of $6 million versus a provision of $14 million last year.

As a result, Phoenix, Arizona-based Apollo's profit for the quarter grew to $14.6 million or $0.13 per share from $13.5 million or $0.12 per share last year.

Excluding items, adjusted earnings for the quarter were $32 million or $0.28 per share, compared with $38 million or $0.34 per share a year ago.

Fifteen analysts had a consensus earnings estimate of $0.19 per share for the quarter. Analysts' estimates typically exclude special items.

For fiscal 2014, Apollo still projects revenue of $3 billion to $3.1 billion, while analysts expect $3.06 billion.

Apollo stock closed Tuesday at $35.16, up $0.92 or 2.69%, $ or %, on a volume of 4 million shares on the Nasdaq. In after hours, the stock dropped $1.56 or 4.44% at $33.60. In the past year, the stock has traded in the range of $16.54 - $35.92.