SEEKING ALPHA: Should Investors Should Stay Clear Of Apollo Education?

Career College Central Summary:

  • Summary

    • Public education is much more affordable than for-profit education.
    • Graduates are employed less and paid less than graduates of non-profit universities.
    • Apollo Education’s upcoming earnings have a good shot at missing Wall Street estimates just as competitor, DeVry Education Group, did earlier this year.
    • Interest rates on federal student loans, the main source of income for Apollo Education, are set to increase July 1, 2015, which can only decrease profit for Apollo Education.
    • We have seen positive growth in the for-profit education sector in select companies during recent years. We sometimes see good financials from the outside where these companies have profited, but rarely from the customer's (student's) perspective, where there is expensive tuition and lacking job opportunities, which will eventually tear these companies to rubble. One company, Apollo Education (NASDAQ:APOL), parent company of the University of Phoenix, has earnings coming up.
  • Will Apollo's Earnings Disappoint?

    • Recently, DeVry Education Group (NYSE:DV) saw earnings of $0.75 per share, just shy of its $0.77 estimate. The results of Apollo Education's earnings coming up on March 25 could be similar. The consensus estimate is $0.14; we will see if Apollo Education shadows its close competitor.
  • Overpriced Tuition

    • While Apollo Education's competitors are seen as other for-profit education companies such as DeVry University and Strayer University (NASDAQ:STRA), its real competitors are its public education counterparts. As more affordable and more practical options are becoming available, students are starting to realize that for-profit education is not the best option. According to College Board, the average tuition at a community college for 2014-2015 was $3,347. This amount was $9,189 average for in-state tuition at public four year colleges. These amounts are increasing significantly at for-profit universities, where students pay on average $15,230 for tuition.
  • Job Outlook

    • In 2012, The Chronicle of Higher Education and American Public Media's Marketplace conducted a survey in which they sought to see how job applicants with for-profit degrees fared with applicants with degrees from other schools. The results are how most would expect. Applicants with a bachelor's degree in business from an online for-profit college were about 22% less likely to make it to the next round of the application process, than applicants from public universities.

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