NEW YORK (TheStreet) -- Apollo Education Group
(APOL - Get Report) shares are down -1.45% to $29.11 on Tuesday after the company disclosed that the Education Department will be conducting a Title IV review of the education company's student financial aid programs.
However, analysts at Piper Jaffray (PJC - Get Report) caution that such actions by the Education Department are not out of the ordinary at for-profit education institutions.
Analysts also noted that the company went through the same review in 2012 and easily passed.
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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 deteriorating net income 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 65.67%, 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. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for APOLLO EDUCATION GROUP INC is rather high; currently it is at 59.03%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.25% trails the industry average.
- APOLLO EDUCATION GROUP INC's earnings per share declined by 16.9% 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 ($2.34 versus $2.20).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Diversified Consumer Services industry average. The net income has decreased by 17.4% when compared to the same quarter one year ago, dropping from $79.95 million to $66.03 million.
- You can view the full analysis from the report here: APOL Ratings Report