American Public Education (NASDAQ: APEI), Right industry, Right Time

American Public Education (NASDAQ: APEI), Right Industry, Right Time

American Public Education (NASDAQ: APEI), Right Industry, Right Time

There is an ongoing disruptive innovation in the educational industry. Around 20 years ago, a simple correspondence course started out as an alternative to traditional education system. This later transformed into an online learning course. At present, online learning providers are finding innovative ways to create a school-like environment.

According to industry pundits, 25 million college students will be taking their classes online by 2016. This means that online education stocks face strong tailwinds moving forward. An example of a solid play in this sector is American Public Education (NASDAQ: APEI). APEI is a provider of online secondary education, specifically serving military and public service communities.  Its system operates through two universities: American Military University and American Public University. It has 87 degree programs and 69 certificate programs in disciplines related to national security, military studies, intelligence, homeland security, criminal justice, technology and business administration.

It recently announced its third quarter results for the current fiscal year. Revenues came in at $77.1 million, 18% higher than the previous year. This puts its 9-month revenues at $227.5 million, an increase of 23% compared to the same period last year. Net income amounted to $10.9 million or $0.60 per share diluted earnings for the third quarter of 2012. From these results, net income for 9 months is at $29.1 million or $1.61 diluted per share. At run-rate, APEI would post full year earnings per share of $2.14, slightly lower than the consensus estimates of $2.25 per share. However, the company expects earnings per share to move from $0.64 to $0.67 for the fourth quarter, which would beat expectations.  

Over the last month, its stock has declined by around 14%. It seems that the bearishness is due to the cautious outlook of the educational stocks in general.  Considering cheap valuations and a high growth potential (1.5X higher than the industry), it would be a good idea for long-term investors to check out this company now.

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  • mrego123

    Great valuation. This stock is certainly cheap and it continues to grow earnings, I would keep an eye on this stock next year.

  • Lillie

    The stock may be bearish now but I can’t see it lasting. Online education is here to stay. Add to that the military aspect and I think this is a winner. I’m going to look into it.

  • meikoacebo

    Also there’s a trend geared towards online education from traditional universities given its flexibility and low cost. I’d also would like to see how APEI attract civilians students from its marketing campaigns and tie-ups. It certainly need to invest in those areas to be profitable.

  • samanthapl

    What is sad is some universities charge extra to take courses online. Students pay one tuition to attend classes on campus, and the same tuition plus a additional fees to take the same classes via the web. Absolutely crazy since the overhead for such classes should be ridiculously less, wouldn’t you think?

  • lyieke

    A cheap stock in a promising field is a strong buy. The fact that the online platform allows for innovation also presents an opportunity for the company to extend its reach over the years. American Public Education is certainly a stock to add to your portfolio, especially so if you are looking for sizeable long term gains.

  • meikoacebo

    samanthapl, that’s right. but overall, still cheaper than the traditional schools. you just have to pick the right online courses.

  • Tyokunbo

    Online education is here to stay, and it allows for innovation.I think this is a winner.

  • mrgambale@gmail.com

    I like this stock and this sector. Valuation is real low and demand is there for these services. Definitely a winner.