American Public Education, Inc. (NASDAQ:APEI) is a provider of exclusively online postsecondary education with emphasis on serving the needs of the military and public service communities. The company operates through two universities, American Military University, or AMU, and American Public University, or APU, which together constitute the American Public University System.
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The company was founded in 1991 under the name of American Military University by a retired Marine officer. At first, the university only offered graduate level programs specializing in military studies curriculum. By 1996, it began offering undergraduate programs but still primarily to military students. In 2002, the company went through a reorganization and began serving the general public. In November 2007, it went public.
One of the main competitive strengths that the company possesses is its affordable tuition, which is one of the lowest in the industry. The reason why it can charge less than its peers is because of its exclusive online education model and lowest student acquisition costs.
The company’s business has a flexible cost basis and is scalable.
From 2007 to 2009, total revenues increased from $69.1 million to $149 million, which is a 116 percent increase, net income increased from $8.8 million to $23.9 million, which is a 172 percent increase, operating margins increased from 25.4 to 30.3 percent, and return on equity increased from 26.1 to 29.2 percent.
Currently, the for-profit education industry is under the government’s scrutiny. Any new regulation is likely to affect the company in a negative way. However, when you compared it to other for-profit education companies, American Public Education is in a little different situation because it does not rely heavily on Title IV loans.
The future growth is likely to come from the continual diversification of the student base away from the military to the general public.