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American Public Education Stock Downgraded – Is it Time to Sell?

APEI has been downgraded but several hedge funds are taking advantage of the low price to increase their holdings. Is this a buying opportunity?
Alex Hamilton is a regular contributor to numerous news sites.
Alex Hamilton is a regular contributor to numerous news sites.

American Public Education APEI was downgraded by analysts at BidaskClub to “strong sell” in a recent report. Zacks Investment Research also downgraded the stock to a “hold” in a report released in July. The stock has been on a steady decline since its last earnings report.

APEI released its second-quarter results on August 8, 2018. The company posted earnings per share of $0.39, a net margin of 7.97% and a return on equity of 8.61%. EPS came in at $0.23 per share in the same period last year. Revenue was at $72.8 million for the second quarter. Analysts were expecting revenue of $73.14 million. Revenue was 0.8% higher compared to the same quarter last year.

Total revenues are expected to fall 0-3% year-over-year.

The company operates through two segments: APEI and HCN. APEI includes minority investments, operational activities at APUS and other corporate activities. Revenues in this segment dropped 1% to $63.7 million due to lower enrollment and course registrations. Net course registrations were flat year over year, and net course registrations by new students dropped 1%. Overall student enrollment fell 4% year over year.

HCN posted strong revenues, up 15.4% to $9.1 million in the second quarter thanks to higher enrollments. Total enrollment was up 17% year over year to 2,020 students. New student enrollment was up 5%. HCN’s total costs and expenses fell 1.7% year over year to $64.8 million in the quarter.

Several hedge funds have changed their positions in APEI. Wells Fargo & Company MN, SG Americas Securities LLC, Legal & General Group Plc, First Trust Advisors LP and Northern Trust Corp all boosted their holdings in the company.

Insider Wallace E. Jr. Boston did sell 4,000 shares of the stock on August 1 at an average price of $43.65 per share.

The company’s stock has been on a steady decline since the release of its second-quarter results, as revenue was sluggish. Enrollment is also down 4% year-over-year.

American Public Education plans to release its third-quarter earnings results after the close of U.S. financial markets on November 6, 2018.

American Public Education is an education services provider that offers educational programs and services through its subsidiaries. The company serves more than 100,000 adult learners around the world and offers more than 100 degree programs. Classes are led by industry influencers. In 2014, the company’s essay typer had published more than 500 essays and books and earned more than 500 awards for their professional practice.

AT&T, T-Mobile and Verizon should be turning the volume up. Their current quiet murmur is just not enough.