A lot of distressing things are said about the state of American public education these days. Sadly, not all of them are wrong. Even more sadly—at least for investors in American Public Education Inc. (NASDAQ:APEI)—a lot of those same things apply to the state of the stock. With American Public Education Inc. down nearly 50% in Wednesday afternoon’s trading, the comparisons are distressingly similar.
The problem for the stock is that it severely missed earnings projections. American Public Education posted a loss of $0.35, while analyst projections looked for a loss of just $0.01. Revenue, meanwhile, didn’t fare much better. American Public Education posted earnings of $152.4 million, which was only slightly less than the $152.63 million projected. Sadly, it was also down 1% against this time last year, meaning that if American Public Education had only done as well as it did last year, it would have turned in a mixed report instead of the disaster it was.
Several problems contributed to these losses, but the biggest goes back to one thing: Rasmussen University. Rasmussen saw several problems: some of the best talent left, nursing students were in open decline, and costs for on-campus learning were only going up. One of only two analysts offering coverage on American Public Education, William Blair’s Stephen Sheldon, noted that Rasmussen was “…expected to remain a headwind to enrollments and profitability over the near-term.”
Meanwhile, hedge funds are very much in agreement, as their overall sentiment is Negative on American Public Education. Worse, hedge funds decreased their holdings by 189,100 shares in the last quarter, making it the fourth consecutive quarter where they have been net sellers.