Why Apollo Education Group (APOL) Is Down Today

NEW YORK (TheStreet) -- Apollo Education Group  (APOL) fell Wednesday thanks in part to Robert W. Baird trimming its target price on the stock to $33 from $36. 

The decline also came amid news that chairman John Sperling, considered a leader in the for-profit education sector, sold 535,000 shares of company stock for $17,049,758.

Apollo owns the University of Phoenix and other similar entities. The stock was down 4.65% to $28.33 at 1:24 p.m. on Wednesday.

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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 reasonable valuation levels. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 86.27% over the past year, a rise that has exceeded that of the S&P 500 Index. 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 1.28, which illustrates the ability to avoid short-term cash problems.
  • APOLLO EDUCATION GROUP INC has improved earnings per share by 8.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth 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 ($2.32 versus $2.20).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Consumer Services industry and the overall market, APOLLO EDUCATION GROUP INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $64.59 million or 27.28% when compared to the same quarter last year. Despite a decrease in cash flow of 27.28%, APOLLO EDUCATION GROUP INC is still significantly exceeding the industry average of -135.67%.
  • You can view the full analysis from the report here: APOL Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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