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Should You Add American Public Education (APEI) Stock Now?


Shares of American Public Education, Inc. APEI have rallied 67.3% year to date, outperforming the 11.4% gain of the industry it belongs to. Also, the company has outperformed the industry in the past year. Strategic Initiatives, new courses and strong digital marketing campaigns bode well.

Moreover, its earnings estimates for 2017 and 2018 have moved up 0.5% and 1.5%, respectively, over the last 30 days, which reflect analysts’ optimism. The company’s Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.

This online provider of higher education has strengths in several key areas. Thus, adding the stock to your portfolio seems prudent.

Solid Growth Strategies

The company has undertaken several initiatives to improve enrollment trends and student persistence. The company intends to drive persistence rate by improving the quality of student mix, release new tools and other initiatives that increase engagement and classroom interactivity.

Hondros College, acquired in November 2013, has made changes in its curriculum that are expected to drive student enrollments. Total student enrollment rose 23% while new student enrollment increased 29% year over year in the fourth quarter of 2017.

American Public Education adopted a geographical approach to marketing, which focuses on using cost-effective channels and aims to reach out to college-ready students. Also, it aims to strengthen its digital marketing campaigns to leverage relationship with military, public service and other high-value student populations.

Notably, for the first quarter of 2018, EPS is likely to witness an increase of 21.4%. The Zacks Consensus Estimate for 2018 earnings is expected to rise 18.6%. Its long-term projected EPS growth rate is 15%.

Therefore, the company currently has a Growth Score of B on our Style Score System that helps us identify potential outperformers.

Positive Industry Outlook

For-profit education companies have been on the radar since the victory of President Donald Trump. A less arduous regulatory environment was assured for such companies during his campaign. Moreover, U.S. Secretary of Education, Betsy DeVos, assured that revised regulations will be fair and balanced for educational companies and will protect students from fraudulent practices and deceptive claims.

The Zacks School Industry has rallied 38.7% in the past year, outperforming the S&P 500 Index’s gain of 14.4%. Also, a good industry rank (among the top 4% out of 265 industries) indicates that companies in this space are likely to benefit from favorable broader factors in the immediate future.

VGM Score

American Public Education has a VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, make solid investment choices.

Other Stocks to Consider

A few other top-ranked stocks in the industry are Grand Canyon Education, Inc. LOPE, Capella Education Company CPLA and New Oriental Education & Technology Group, Inc. EDU.

Grand Canyon sports a Zacks Rank #1, while the other two companies carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Grand Canyon’s earnings for 2018 are expected to increase 18.7%.

Capella Education surpassed earnings estimates in three of the past four quarters with an average beat of 3.5%.

New Oriental Education is expected to witness 15.5% growth in fiscal 2018 earnings.

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