Apollo Group's (Nasdaq:APOL) reported second quarter results on Monday that demonstrated it is still working to find its footing, following increased industry scrutiny from regulators. An uptick in enrollment was an encouraging sign, though it could still be some time until total company sales and profits start moving steadily forward again.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Second Quarter Recap

Apollo's revenues fell 7.5% to $969.6 million. Management attributed the decline to lower University of Phoenix enrollment, though it was able to offset the 8% drop in U of P revenue with some tuition increases and related fee changes. Enrollment decreased 12.2% to 355,800 students. On a more positive note, new enrollment eked out 1% growth, improving from a period of market decline as Apollo has adjusted its recruiting practices in response to increased government regulation and criticism that for-profit recruiting had not necessarily taken the best interest of underlying students to heart.

Last year's goodwill impairment charge helped reported operating income jump to $106.3 million, following a loss of $23 million in last year's second quarter. Net income also returned to positive territory at $63.9 million, or 51 cents per diluted share.

SEE: Surprising Earnings Results

Outlook and Valuation
For the year, analysts expect sales to continue to struggle and fall about 10% to roughly $4.2 billion. They project earnings of around $3.36 for an annual decline of over 30%. Given the earnings expectations, Apollo currently trades at a forward P/E of about 12.

The Bottom Line
Apollo is still working to regain its footing and find its way back to sustainable sales and profit growth. One of its recent initiatives is to forge relationships with corporations and help drive education among their employees. It also put a greater emphasis on specific job training programs, such as in telecommunications network support. Rivals such as Devry (NYSE:DV) and ITT Educational Services (NYSE:ESI) have been relatively strong in these trade-based classes.

SEE: Competitive Advantage Counts

In terms of total revenue, Apollo is still larger than these two players combined. It is also much larger than other rivals, including Strayer (Nasdaq:STRA) and Capella Education (Nasdaq:CPLA). It remains the largest in the industry and its University of Phoenix name has high brand recognition. At some point, growth will likely return to the company, though there is likely no hurry to invest until visible signs of growth start to appear.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!