Apollo Group Inc. (APOL:US), the largest U.S. for-profit college chain, posted fourth-quarter profit and revenue that topped analysts’ estimates even as enrollment fell.
Net income declined 71 percent to $21.6 million, or 19 cents a share, in the three months ended Aug. 31, from $75.4 million, or 66 cents, a year earlier, Apollo, owner of the University of Phoenix, said today in a statement. Profit excluding some items was 55 cents a share, topping the 25-cent average of estimates (APOL:US) compiled by Bloomberg.
For-profit colleges are struggling with heightened competition from traditional universities, student reluctance to take on debt amid high unemployment and state and federal investigations that raised questions about the institutions’ job-placement and other marketing claims. Apollo has responded by cutting operating expenses 11 percent in the quarter.
“The fundamentals are challenging,” Peter Appert, an analyst at Piper Jaffray & Co. in San Francisco, said before the earnings release. He has a neutral rating on Apollo and doesn’t own shares.
Apollo, based in Phoenix, rose 10 percent to $23.03 in trading after the close in New York. It gained 2 cents to $20.94 at 4pm. The shares are unchanged (APOL:US) this year.
Sales in the quarter decreased 15 percent to $845 million. Analysts on average projected $824 million.
Total enrollment at the University of Phoenix fell 18 percent, to 269,000, from a year earlier, the company said. New enrollment dropped 22 percent.
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