On Monday, Truist Securities adjusted its outlook on American Public Education (NASDAQ:APEI), reducing the price target to $15 from the previous $20 while maintaining a Hold rating on the stock. This action follows the company's second-quarter results which surpassed expectations, but the third-quarter guidance was set lower, and the full-year forecast remained unchanged.
American Public Education's stock has experienced a notable decline, dropping 21% since the earnings report on August 6. Truist Securities attributed the stock's underperformance to heightened investor expectations after five consecutive quarters of strong results. Despite the downturn, the firm noted that the reaction seemed somewhat excessive given the current market conditions.
The management of American Public Education explained that the lower outlook for the third quarter was due to typical seasonal patterns and ongoing investments in the American Public University System (APUS), including IT, personnel, and marketing. These investments are part of the company's strategy to support long-term growth.
The analyst from Truist Securities expressed surprise at the severity of the stock's decline over the past week, particularly in the context of an inconsistent earnings season for the education sector. Furthermore, it was pointed out that American Public Education is trading at a significant discount, approximately 65%, compared to its larger industry counterparts.
In other recent news, American Public Education, Inc. (APEI) has reported steady growth, with its Q2 2024 financial results showcasing a 3.9% year-over-year revenue increase to $152.9 million. The company's adjusted EBITDA also saw a significant uptick of 24% to $10.9 million.
Despite a non-cash impairment charge resulting in a diluted loss per share of $0.06, APEI remains optimistic, reiterating its full-year guidance and highlighting its plans to expand Rasmussen's campus presence to meet healthcare role demands.
Rasmussen reported positive revenue and enrollment growth for the first time year-over-year since its acquisition. Additionally, APUS revenue increased by 4.7% to $77 million, while Rasmussen and Hondros also experienced revenue growth. These developments are recent and reflect a consistent performance for APEI.
However, APEI faced challenges with a non-cash impairment charge of $64 million, leading to a diluted loss per common share of $0.06. Rasmussen's total student enrollment also decreased by 2.2%. Despite these issues, APEI is focusing on expanding and stabilizing Rasmussen, addressing the increasing demand for nursing and clinical roles.
InvestingPro Insights
In the wake of Truist Securities' revised outlook on American Public Education (NASDAQ:APEI), a glance at InvestingPro data provides additional context to the stock's current standing. With a market capitalization of approximately $239.33 million, APEI is navigating the market with a P/E ratio of 53.63, which adjusts to 38.75 when looking at the last twelve months up to Q2 2024. Despite recent price volatility, APEI boasts a robust gross profit margin of 52.11% over the same period, underscoring the company's ability to maintain profitability amidst challenging market conditions.
From an investment standpoint, two InvestingPro Tips highlight the company's financial health and potential for growth. APEI has achieved a perfect Piotroski Score of 9, indicating strong financial positioning. Additionally, analysts predict that the company will be profitable this year, a sentiment supported by the fact that the company has been profitable over the last twelve months. These insights suggest that while the stock has seen a significant decline in the short term, with a price drop of over 20% in the past week, its fundamentals may provide a basis for recovery.
For readers looking to delve deeper into APEI's financials and future prospects, there are a total of 14 InvestingPro Tips available, which can be explored further to inform investment decisions. The InvestingPro platform also offers a Fair Value estimate of $18.76 for APEI, slightly below the analyst target of $20, yet offering a potential upside from the previous close price of $13.65.
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