American Public Education, Inc.

APEI Details

American Public Education, Inc. (NASDAQ: APEI) serves about 108,400 students through three subsidiary institutions: American Public University System (APUS), Rasmussen University (RU), and National Education Seminars, which it refers to as Hondros College of Nursing (HCN). APEI earns money through course registrations and enrollments, instruction services, tuition, and other fees.

Latest News:

• Reaffirmation of Accreditation: On March 07, 2022, APUS announced that the Accreditation Council for Business Schools and Programs (ACBSP) Baccalaureate/Graduate Degree Board of Commissioners reaffirmed the Dr. Wallace E. Boston School of Business. The reaffirmation reinforces the School's academic solid standards in providing online higher education to students from all walks of life.

FY21 Results:

• Upsurge in Topline: Revenues increased by 30.15 % year on year to USD 418.80 million in FY21 (ended December 31, 2021) compared to USD 321.79 million in FY20, owing primarily to the inclusion of RU segment revenue from the Closing Date through December 31, 2021, as well as an increase in student enrollment at HCN during that period.
• Slight Fall in Profitability: APEI reported a net income of USD 17.75 million in FY21 vs. USD 18.82 million in FY20 due to increased total costs and expenses.
• Cash and Debt Position: As of December 31, 2021, the company had cash & cash equivalents of USD 149.63 million and total debt of USD 160.52 million.
• Progress in Student Enrollments: HCN student enrolment climbed by 27.9% compared to the previous year.

Key Risk:

• Dependence on Tuition Assistance: Tuition assistance (TA), veteran affairs (VA) education benefits, Title IV programs, private loans, state and federal grants, and corporate reimbursement programs are used by APUS students to pay for their education. Students utilizing the Department of Defense's (DoD's) tuition aid programs accounted for 45% of APUS's net course registrations in 2021, those are utilizing VA education benefits 21%, and those using ED's Title IV programs 20%. As a result, any reduction or suspension of TA to APUS by the DoD may harm the company's financials.

Outlook:

Q1FY22 Estimates (Source: Company Presentation, March 02, 2022)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

APEI's share price has declined 35.38% in the past twelve months and is currently leaning towards the lower end of its 52-week range of USD 16.97 to USD 37.60. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 28.25.

Considering the significant correction in the stock price in the past twelve months, strong top-line performance, optimistic outlook, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 23.05, down 2.54% as of March 23, 2022.

Three-Year Technical Price Chart (as of March 23, 2022). Source: REFINITIV; Analysis by Kalkine Group

Technical Summary Analysis

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.