Capella Education Company Earnings Preview

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Capella Education Company (NAS: CPLA) hasn't been able to establish an earnings trend, bouncing between beating and falling short of estimates during the past fiscal year. The company will unveil its latest earnings on Tuesday, April 24. Capella Education is an online post-secondary education services company that offers a variety of doctoral, master's, and bachelor's programs in markets like health and human services, business management and technology, and education.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Capella Education, with nine out of 13 analysts rating it hold. Analysts like Capella Education better than competitor Career Education overall. Zero out of 10 analysts rate Career Education a buy compared to four out of 13 for Capella Education. Analysts still rate the stock a hold, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $110 million in revenue this quarter. That would represent a decline of 1.2% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.78 per share. Estimates range from $0.74 to $0.80.

What our community says:
CAPS All-Stars are enthusiastically backing the stock, with 96.9% awarding it an outperform rating. Most of the community agrees with the All-Stars, with 94.5% assigning it a rating of outperform. Even with a robust four out of five stars, Capella Education's CAPS rating falls a little short of the community's upbeat outlook.


Management:
Capella Education's income has fallen year over year by an average of 14.2% over the past five quarters. Revenue has fallen in the past two quarters. The company's gross margin shrank by 3.6 percentage points in the last quarter. Revenue fell 4.1% while cost of sales rose 5.3% to $44.3 million from a year earlier.

Now let's look at how efficient management is at running the business. Margins illustrate how efficiently a company captures portions of sales dollars. Capella Education has seen slipping gross margins year over year for the last four quarters. Gross margins reflect the total sales revenue retained after costs. Here is how Capella Education has been doing for the last four quarters:

Quarter

Q4

Q3

Q2

Q1

Gross Margin

59.7%

58.4%

60.1%

61.8%

Operating Margin

17.2%

14.5%

22.5%

20.2%

Net Margin

11.0%

9.7%

14.6%

13.1%

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Earnings estimates provided by Zacks.

At the time this article was published

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