Capella’s Stock Falls On Lower Enrollment, Revenue
Capella Education Company’s stock fell about 10 percent Tuesday morning after it announced declining revenue and enrollment, although its earnings beat analyst’s expectations.
The Minneapolis-based online education provider announced that net earnings for the fourth quarter, which ended December 31, totaled $10 million, or $0.79 per share, up 16 percent from $8.6 million, or $0.68 per share, during the same period in 2012. Earnings per share were $0.03 higher than what analysts polled by Thomson Reuters had expected.
Revenue, meanwhile, totaled $106 million, down 14.8 percent from $263.3 million in the fourth quarter of 2012. Fourth-quarter revenue fell short of analysts’ projections of $106.4 million.
Capella University’s total enrollment fell 2.5 percent to 35,432, and its new enrollment decreased by 6.8 percent from the same time last year.
For the full fiscal year, the company’s revenue decreased by 1.5 percent to $415.6 million, and its earnings dropped just over 3 percent to $35.2 million. Although the university’s average quarterly enrollment growth decreased by 2 percent during 2013, its total new enrollment increased by 2 percent.
“We continued to make steady progress in 2013, delivering annual new enrollment growth and operating earnings improvements in a challenging market environment,” Chairman and CEO Kevin Gilligan said in a statement. “We are confident that our strategic focus on learner success, innovation, and relationship-based marketing is positioning Capella for long-term, sustainable growth.”
For the first quarter of the new year, Capella said it expects new enrollment growth to be slightly positive compared to 2013 but that its total enrollment will decline 1.5 to 2.5 percent. It also expects its revenue to be either flat or down 1 percent compared to the first quarter of last year.
“Performance trends stabilized in 2013,” Steve Polacek, senior vice president and chief financial officer, said in a statement. “While the timing of our return to total enrollment growth has likely shifted to the latter part of 2014, we believe moderate annual new enrollment growth and operating margin improvements are achievable in 2014.”
During the fourth quarter, Capella repurchased about 64,000 shares of its stock, totaling $4.2 million. Throughout all of 2013, the company repurchased about 170,000 of its own shares, totaling $9 million.
Shares of Capella’s stock were trading down about 7.7 percent at $61.22 per share Tuesday afternoon.