Earnings Preview: Apollo Group

Apollo Group (APOL) is expected to report Q2 earnings on Thursday, March 27 after the close, with a conference call scheduled for 5:00 pm ET.

Guidance

Analysts are looking for a profit of 52c on revenue of $703.53M. The consensus range is 49c to 56c for EPS, and revenue of $693.32M to $717.33M, according to First Call.

On February 21, the company assured investors of its financial stability. Apollo said it had liquidated Auction Rate Securities loans and would maintain a more conservative investment portfolio in the near future. The company said it had approximately $1B in liquidity as of February 19.

Analyst analysis

On March 3, a Banc of America analyst downgraded shares of the education company to Sell from Buy because of weakness in the student-lending market. The analyst said that year-over-year new student enrollment has declined steadily for Apollo, which operates the University of Phoenix, and cautioned that it may be harder for Apollo to recruit new students amid weakness in the credit markets because consumers may be less willing to take on more debt. The analyst said community colleges may emerge as a more viable option.

An analyst at Credit Suisse, however, believes that Apollo Group's brand, scale and strong balance sheet, along with its value to the U.S. education system, are likely to help the company maintain its leadership position. The firm, which has a Neutral rating on the stock, said the company could also benefit from its low exposure to the lending environment.