Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.
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- The revenue growth came in higher than the industry average of 14.3%. Since the same quarter one year prior, revenues rose by 13.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 2.37, which demonstrates the ability of the company to cover short-term liquidity needs.
- AMERICAN PUBLIC EDUCATION's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, AMERICAN PUBLIC EDUCATION increased its bottom line by earning $2.34 versus $2.23 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $2.34).
- APEI has underperformed the S&P 500 Index, declining 19.44% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Net operating cash flow has decreased to $18.43 million or 19.66% when compared to the same quarter last year. Despite a decrease in cash flow of 19.66%, AMERICAN PUBLIC EDUCATION is still significantly exceeding the industry average of -322.81%.
-- Written by a member of TheStreet Ratings Staff