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Poor Guidance Paves a Bearish Road for American Public Education

APEI's first-quarter outlook landed well below Wall Street's predictions

by 2/29/2012 2:15:54 PM
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After the close last night, American Public Education, Inc. (APEI - 39.90) reported fourth-quarter earnings of $13 million, or 71 cents per share, up 35% from $9.6 million, or 52 cents per share, in the year-ago quarter. Meanwhile, revenue jumped 34% to $75.7 million. Results surpassed analysts' consensus estimates for a bottom line of 60 cents per shareon sales of $72.9 million. For its first quarter, APEI expects to earn 45 cents to 49 cents per share on $71.5 million in revenue. Analysts, on average, are calling for earnings of 54 cents per share on revenue of $74.9 million.

APEI has lost more than 3% so far today, due to its weak guidance. This dip has exacerbated the shares' 4.5% year-to-date deficit. On a relative-strength basis, the stock has lagged the broader S&P 500 Index (SPX) by 12.5% over the past 40 sessions. APEI is currently struggling below its 40 week moving average and the $40 level. This duo acted as resistance from mid-August to early December 2011, and could resume this role going forward.

Weekly

On the sentiment front, it appears that plenty of traders are betting on an extended slide for APEI. Short interest rose 5.7% during the past month, and now makes up 15.6% of the security's available float. In fact, at APEI's average pace of trading, it would take over three weeks for all these bearish bets to unwind.

Elsewhere on the Street, the upbeat analysts following APEI could rethink their current positions, in light of the stock's poor performance. According to Zacks, there are five "strong buy" endorsements, compared to six lukewarm "holds" and not a single "sell" suggestion. What's more, Thomson Reuters places the consensus 12-month price target at $48.33, which represents a 24.6% premium to today's session low of $38.78.

Should APEI continue to struggle beneath these emerging technical hurdles, a fresh bout of downgrades and/or price-target cuts could weigh heavily on the education issue.

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