Apollo Group Inc., the biggest U.S. for-profit college operator, said earnings in the fiscal first quarter declined 1.9 percent as fewer new students registered. The shares rose as much as 11 percent in extended trading as management cut costs more than expected.
Net income for the three months ended Nov. 30 fell to $235.7 million, or $1.61 a share, from $240.1 million, or $1.54 a share, in the same period a year earlier, Phoenix-based Apollo said today in a statement. Excluding certain items, the company had a profit of $1.63 a share, beating the $1.35 average estimate of 21 analysts surveyed by Bloomberg.
The U.S. Department of Education has increased regulation of student recruitment, and the company began allowing applicants to sample courses before paying to sign up. The number of new students signing up for classes declined 42 percent to 56,500, from 98,100 a year earlier, Apollo said. Apollo is working to manage costs to align with student needs, said Chas Edelstein, the company’s co-chief executive officer, in the statement.
“This is a transition story and if you’re buying, you’re making a bet that management can turn it around,” said Robert Wetenhall, an analyst with RBC Capital Markets who rates Apollo “sector perform.” “That’s a big bet.”
Apollo rose as much as $4.06 to $40 in extended trading after declining $2.04, or 5.4 percent, to $35.94 at the 4 p.m. New York time close of the Nasdaq Stock Market. The company has lost 41 percent in the past 12 months. An index of 13 for-profit colleges lost 11 percent.