Capella Education Company’s (CPLA) strong focus on working adults and exclusive online education has enabled it to establish a healthy position in the for-profit post-secondary education industry. The company’s sustained effort to expand educational programs helps it to boost enrollments, and in turn, the top-line.
During first-quarter 2010, total active enrollment soared to 37,178 students, up 32.1% from the prior-year quarter. Graduate program enrollment rose 28.9% to about 30,000 learners.
Due to the surge in enrollment, revenue for the quarter grew 32.4% to $101.2 million. Capella now expects enrollment and revenue to rise in the range of 28% to 30% in second-quarter 2010, and between 26.5% and 28.5% in fiscal year 2010.
Higher education sees a countercyclical movement during sluggish economic conditions. Post-secondary enrollments tend to rise as both unemployed and employed workers return to school to re-skill themselves and existing students remain in school for a longer duration compelled by the intensely competitive job market.
Furthermore, Capella’s debt-free balance sheet and solid cash reserves bode well for future operating performance. Although stiff competition from other online education providing companies remains a threat, we maintain an Outperform recommendation on the stock, given its strong fundamentals.
Capella’s shares also maintain a Zacks Rank #2, which indicates a short-term ‘Buy’ recommendation.
Read the full analyst report on “CPLA”
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