HomeMost PopularInvesting Unraveling the Meteoric Rise of American Public Education, Inc. (APEI)

Unraveling the Meteoric Rise of American Public Education, Inc. (APEI)

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America Public Education, Inc. (APEI) has undertaken a remarkable ascent, surging a whopping 195.2% in the past six months. This surge triumphs over the Schools industry’s modest 24.3% growth and the S&P 500 index’s 21.9% rally.

Diving deeper into the success story, one finds the exceptional contributors behind this extraordinary growth – the American Public University System (“APUS”), Hondros College of Nursing (“HCN”), and Graduate School USA (“GSUSA”). A strategic focus on cost-saving endeavors and affordable tuition offerings have paved the way for APEI’s stellar performance.

Furthermore, analysts’ renewed optimism is evident from the upward revision of APEI’s 2024 earnings estimates to 62 cents per share, up from 55 cents in the past 30 days. The wave of positivity also flows from the company’s stellar VGM Score of A, backed by impressive Growth and Value scores. This confluence of factors firmly cements APEI’s position in the market.

Zacks Investment Research
Image Source: Zacks Investment Research

The spirit of outperformance in APEI’s earnings is undeniable, surpassing the Zacks Consensus Estimates in three of the trailing four quarters, with an average surprise of an astonishing 125%.

Now, let’s navigate through the key drivers propelling this Zacks Rank #2 (Buy) company’s exceptional growth trajectory.

Strength in Diversity: APUS, HCN & GSUSA

Diving into the metrics, American Public has been riding high on the back of a robust enrollment surge at APUS and HCN. Notably, net course registrations at APUS saw a 4.9% increase year over year in 2023, while HCN experienced consistent enrollment momentum for the 16th consecutive quarter, clocking in a growth rate of 16.9% in 2023.

Despite facing headwinds like higher costs and inflationary pressures, APUS and HCN managed to drive revenues up by 6.4% and 20.9%, respectively, in 2023. Meanwhile, GSUSA witnessed a revenue surge of 25% from its 2022 levels. These achievements are a testament to the efficacy of the company’s marketing strategies and enrollment tactics, painting a vibrant picture of progress.

Efficiency at its Core: Cost Containment Initiatives

In its quest for sustainable growth, APEI has embraced various cost containment measures, which came to fruition during the third quarter of 2023. The organization executed operational enhancements, enhancing marketing efficiency, and restructuring its cost framework to align with the current enrollment and revenue landscape at Rasmussen. A significant reduction in force, accounting for 74 employee terminations and 57 eliminated positions, is expected to yield annualized savings of approximately $15.5 million.

This steadfast focus on operational efficiency is evidenced by an expansion of EBITDA margin by 50 basis points to 9.9% in 2023, setting the scene for a promising margin growth trend in the coming quarters and the year 2024. This trajectory is underpinned by judicious tuition hikes, heightened marketing investments, and prudent cost management.

Empowering Access: Affordability Initiatives

Not just content with growth, APEI has embarked on several initiatives to bolster enrollment rates and enhance student retention. The company’s strategic moves aim to enhance student engagement, offering a slew of competency-based education programs and fostering a conducive learning environment. The geographic marketing strategy adopted by APEI positions it to tap into a diverse pool of college-ready students while underpinning its commitment to accessibility and affordability.

A steadfast commitment to making education affordable is woven into the fabric of APUS, offering tuition rates that are among the most competitive in the four-year for-profit sector. The provision of tuition grants and book subsidies for active-duty military students at APUS underscores the company’s commitment to enabling education access for all.

Healthcare Heroes: Focus on Nursing Programs

Against the backdrop of a healthcare sector grappling with severe talent shortages, APEI’s RU segment stands as a beacon of hope. With 23 campuses under its wing, APEI is at the forefront of training the next generation of nurses, aiming to bridge the talent chasm and fortify healthcare outcomes. The company’s unwavering dedication to its mission underscores its pivotal role in shaping the future of healthcare.

Exploring Other Gems

Apart from APEI’s resplendent rise, other top-performing stocks in the educational sector include:

Adtalem Global Education Inc. (ATGE) – A Zacks Rank #1 (Strong Buy) holding with a commendable history of outperforming estimates.

Ralph Lauren Corporation (RL) – Garnering a Zacks Rank #1, RL boasts an impressive earnings track record.

Hyatt Hotels Corporation (H) – Positioned at a Zacks Rank #2, H has consistently surprised with its earnings.

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