(Apollo Group earnings report updated with analyst commentary and quotes from the company's conference call .)
PHOENIX (TheStreet) -- Apollo Group (APOL) shares soared Tuesday thanks to an earnings beat posted late Monday.
Despite the profit decline, Apollo handily beat expectations for earnings of $1.35 per share, or $197.7 million. Revenue came in at $1.33 billion, up 5.4% from year-earlier revenue of $1.26 billion, driven largely by tuition price increases at Apollo's flagship University of Phoenix. Top-line results also beat expectations. Analysts' consensus call had been for revenue of $1.26 billion. "Outlook for most of these companies in the space still remains murky," said Stern Agee & Leach analyst Arvind Bhatia. Height Analytics analyst Jarrel Price said "we are encouraged that the cost of positioning the company for future success is not worse than expected given industry trends." "We do not think yesterday's first-quarter announcement indicated a meaningful acceleration in Apollo's recovery," he added. RBC Capital Markets analyst Robert Wetenhall said that "investors are starting to give Apollo credit for improving the quality of its business model, but remain cautious due to poor enrollment visibility."
New student enrollment at University of Phoenix fell 42% in Apollo's first quarter, a sharp reversal from growth of 14% in the year-earlier period. "We would expect the year-over-year decline in new degreed enrollment in the second quarter to be about the same as the first quarter," CFO Brian Swartz said on a conference call with investors. "Because of a large decline in new enrollments, coupled with the graduation of some of our existing student population, we expect increasing declines in total enrollment as we move through the year," Swartz said. The company added that it does not expect materially unfavorable findings from the Department of Education's review of the education sector that began in December of last year, looking into for-profit school programs funded with federal aid.
"While the company and industry are going through a transition, Apollo may be ahead of the curve based on its initiatives -- however painful they may be to near-term results," noted BMO Capital Markets analyst Jeff Silber. Strayer's enrollment update dragged much of the education sector sharply lower in Monday's trading but many industry players rebounded somewhat in Tuesday's session.
-- Written by Miriam Marcus Reimer in New York. >To contact the writer of this article, click here: Miriam Reimer. >To follow the writer on Twitter, go to http://twitter.com/miriamsmarket. >To submit a news tip, send an email to: firstname.lastname@example.org.
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