01 March 2006

Missing the Quick Dip in the Online Education Stocks?

Apollo (APOL) dropped 15.5% yesterday, to $49.38. The operator of the for-profit University of Phoenix missed earnings and revenue estimates. Analysts' consensus called for earnings of 54 cents per share on $586M of revenue. APOL forecasted 43 to 44 cents per share on $570M of revenue.

A competitor in the online and distance education field, Strayer (STRA) had a sympathy drop of 6.5% to $96.33.

SmartMoney gave me some quick numbers to consider, STRA vs. APOL:
5-yr Earnings Growth - 19.17% vs. 30.97%
Net Profit Margin - 21.80% vs. 19.90%
PEG - 1.46 vs. 0.87
ROE - 31.90% vs. 71.10%
ROA - 21.60% vs. 37.20%

These are some riveting numbers. They are downright gaudy.

I thought about buying on the dip, but would sleep on it. A prudent, not piggish, move.

Then I saw this piece early this morning in the Times with an opening sentence that should help these stocks rebound quicker than even I expected:

It took just a few paragraphs in a budget bill for Congress to open a new frontier in education: Colleges will no longer be required to deliver at least half their courses on a campus instead of online to qualify for federal student aid.

I think I missed the opportunity to take advantage of a real bargain. I'm looking forward to the opening of the market today to see just how much APOL and STRA rebound on this significant piece of news.

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