Why Apollo Education Group's (APOL) Stock Is Down

NEW YORK (TheStreet) -- Shares of Apollo Education Group Inc. (APOL) are down today 7.8% to $32.42. The company reported lower-than-expected quarterly revenue.

Also, enrollments fell 16.8% at its flagship University of Phoenix. 

Revenue declined 18.6% to $679.1 million, below analysts expectations. Excluding items, the company earned 28 cents per share.

Additionally, Apollo said it received a subpoena from the Department of Education's Office of Inspector General requesting information about the operations of the Northeast region of the University of Phoenix. 

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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, 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 86.42%, 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.
  • The gross profit margin for APOLLO EDUCATION GROUP INC is rather high; currently it is at 60.33%. 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 11.54% trails the industry average.
  • Net operating cash flow has decreased to $128.90 million or 38.65% when compared to the same quarter last year. Despite a decrease in cash flow of 38.65%, APOLLO EDUCATION GROUP INC is still significantly exceeding the industry average of -131.98%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Consumer Services industry. The net income has significantly decreased by 25.9% when compared to the same quarter one year ago, falling from $133.50 million to $98.89 million.
  • You can view the full analysis from the report here: APOL Ratings Report

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