NEW YORK ( TheStreet) -- American Public Education (Nasdaq: APEI) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity. Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 34.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- APEI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, APEI has a quick ratio of 2.30, which demonstrates the ability of the company to cover short-term liquidity needs.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to other companies in the Diversified Consumer Services industry and the overall market on the basis of return on equity, AMERICAN PUBLIC EDUCATION has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- APEI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 27.34%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, APEI is still more expensive than most of the other companies in its industry.
-- Written by a member of TheStreet Ratings Staff