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Apollo Education (APOL) Receives Downgrade

NEW YORK (TheStreet) -- Apollo Education (APOL) received a downgrade to "underweight" from "equal-weight" from Barclays Wednesday.

Apollo Education fell 3.1% to $32.57.

The firm set a $29 price target for the education company, up from the previous $23. The entire sector has limited enrollment visibility, according to Barclays.

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Separately, TheStreet Ratings team rates APOLLO EDUCATION GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate APOLLO EDUCATION GROUP INC (APOL) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, APOL's share price has jumped by 74.55%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • APOL's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, APOL has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
  • APOL, with its decline in revenue, underperformed when compared the industry average of 4.5%. Since the same quarter one year prior, revenues fell by 18.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • APOLLO EDUCATION GROUP INC's earnings per share declined by 26.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, APOLLO EDUCATION GROUP INC reported lower earnings of $2.20 versus $3.19 in the prior year. This year, the market expects an improvement in earnings ($2.28 versus $2.20).
  • Net operating cash flow has decreased to $128.90 million or 38.65% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: APOL Ratings Report

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