Good points by both the article and commenters here. At the end of the day, Apollo is probably cheap enough to hold your nose and pick up some shares. The enrollment declines will anniversary later this year, making future comparisons look better. And a lot of the recent acceleration in declines, IMO, is due to their campus closing strategy. Campuses are good marketing tools in this industry.
However, my concern is management's strategy here. One commenter is right when he/she points out that the company is moving towards vocational programs. It's easy enough to understand why - less federal spend exposure - but do these offerings have enough appeal to potential students? It's a big risk.
Finally, I get a little agitated when "investors" talk about for-profit education like it's the only schools where students don't pay back loans. Go look at the cohort rates on the MAAC schools, or even Harvard Medical! It's a lot harder to pay off loans when you don't have parents to do it for you.
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You are certainly right the SA's publishing "standards" are anything but. I'm fairly certain I could submit the same article twice and get two completely different feedbacks. Wasn't that way a few years ago.
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Well, opinions differ. I don't think all 10 are necessarily great picks. I think a few of them could be. In any case, cherry picking one of about 500 articles I have published on Seeking Alpha seems a bit disingenuous.
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I think your comments have merit. They are paying out 100% of free cash flow on the dividend, so unless they start growing the dividend could certainly be in jeopardy. And, like you mention, a CEO change is pretty much the perfect time to cut.
That said, they did declare the November payout at the same rate. And they do have $21 million in cash in the bank with no debt. So I think they can probably sustain it for another year at least while they try to get Asia growing.
Even if they did cut it a bit, investors could still be looking at a 6-7% yield with adequate coverage.
How To Use Excess Cash In Stock Analysis [View article]
>Your formula >Excess Cash = Cash - Current Liabilities + (Current Assets - Cash) > >can be simplified to >Excess Cash = Current Assets - Current Liabilities > >as the 2 cash terms cancel out.
The use of the MAX part is important. Take for example the following situation, stock KLIC (Kulicke & Soffa), where current assets far exceed current liabilities.
Cash = $381 C.Assets = $648 C.Liabs = $135
By the "Excess Cash = Cash - Current Liabilities + (Current Assets - Cash)", you get $513, but this is more than cash! So it doesn't make sense.
Likewise, "Excess Cash = Cash - (Current Liabilities - Current Assets + Cash)" is also $513 - just a different way to express it.
As you mentioned, $513 is also the result of (Current Assets - Current Liabilities).
It is when you add the MAX part in where you guard against getting a figure greater than cash in the first place.
MAX(0; (Current Liabilities - Current Assets + Cash))
Here, the result of the max compare is -$132. This is the amount that current assets exceed cash. So you discount it to zero and substract from total cash getting... total cash. All of it is excess!
Hope this helps. I realize now the article is probably not totally clear on the importance of the MAX part.
High Piotroski Scores In Magic Formula Investing [View article]
Totally agree, that's the whole basis of what I do. GNI is a good example of an MF stock to avoid, it's basically an annuity with a known end point that's been selling above a very easy-to-calculate value for several years now.
Perhaps, although I tend to look pretty skeptically on the weather excuse. UGG's is a fashion brand, not a utility label. Not too many roadside workers or hunters sporting them....
High Piotroski Scores In Magic Formula Investing [View article]
Both MFI and Piotroski recommends holding positions for 1 year without any mechanical sell signals. In my own experience, calculating some sort of reasonable fair value (using DFCF or multiple analysis, or both) and selling if/when the stock reaches it before 1 year is a pretty good idea.
Is Apollo Group A Value Trap? [View article]
However, my concern is management's strategy here. One commenter is right when he/she points out that the company is moving towards vocational programs. It's easy enough to understand why - less federal spend exposure - but do these offerings have enough appeal to potential students? It's a big risk.
Finally, I get a little agitated when "investors" talk about for-profit education like it's the only schools where students don't pay back loans. Go look at the cohort rates on the MAAC schools, or even Harvard Medical! It's a lot harder to pay off loans when you don't have parents to do it for you.
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That said, they did declare the November payout at the same rate. And they do have $21 million in cash in the bank with no debt. So I think they can probably sustain it for another year at least while they try to get Asia growing.
Even if they did cut it a bit, investors could still be looking at a 6-7% yield with adequate coverage.
Thanks for commenting!
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How To Use Excess Cash In Stock Analysis [View article]
How To Use Excess Cash In Stock Analysis [View article]
>Excess Cash = Cash - Current Liabilities + (Current Assets - Cash)
>
>can be simplified to
>Excess Cash = Current Assets - Current Liabilities
>
>as the 2 cash terms cancel out.
The use of the MAX part is important. Take for example the following situation, stock KLIC (Kulicke & Soffa), where current assets far exceed current liabilities.
Cash = $381
C.Assets = $648
C.Liabs = $135
By the "Excess Cash = Cash - Current Liabilities + (Current Assets - Cash)", you get $513, but this is more than cash! So it doesn't make sense.
Likewise, "Excess Cash = Cash - (Current Liabilities - Current Assets + Cash)" is also $513 - just a different way to express it.
As you mentioned, $513 is also the result of (Current Assets - Current Liabilities).
It is when you add the MAX part in where you guard against getting a figure greater than cash in the first place.
MAX(0; (Current Liabilities - Current Assets + Cash))
Here, the result of the max compare is -$132. This is the amount that current assets exceed cash. So you discount it to zero and substract from total cash getting... total cash. All of it is excess!
Hope this helps. I realize now the article is probably not totally clear on the importance of the MAX part.
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Didn't think so.
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