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Capella Education Banks on New Programs to Drive Enrollment

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Capella Education Company has been exhibiting a mixed performance of late. Through various undertakings like investments in marketing and innovative curriculum offerings, the company has been trying to offset the sluggish enrollment trend.

In the last reported second-quarter 2017, the company portrayed mixed results, wherein the bottom line outpaced the Zacks Consensus Estimate by 12.5% while the top line lagged the same by 0.4%. Reported earnings decreased 3.2% year over year while revenues inched up 2.7% from the year-ago level.

Doctoral Program Enrollment Weak

Capella University has been witnessing a negative enrollment trend for its doctoral program. This is because an improving employment scenario in the United States has resulted in decreased demand for academic programs. The lure of skilled jobs are compelling students to opt out of their academic aspirations, posing a concern for Capella Education as well as other for-profit educations companies including Strayer Education, Inc. (STRA - Free Report) , Adtalem Global Education Inc. (ATGE - Free Report) and American Public Education, Inc. (APEI - Free Report) .

In fact, in the company’s last reported quarter, Doctoral enrollment decreased 7% to 9,052 from the year-ago level.  Moreover, the Post-Secondary segment witnessed a decline in total active enrollment of 1.7% to 37,588 learners. New enrollment also dropped 9.6% on a year-over-year basis. Operating margin of 14% fell 290 basis points (bps) year over year indicating lower revenue generation and higher costs.

New Programs & Marketing Plans Hold the Key

 Capella Education has invested in new programs and specializations to improve student outcome. Revision of curriculum and new course offerings enhance the company’s product portfolio, which in turn is expected to boost enrollment and long-term growth. In fact, Capella Education’s well-known and versatile FlexPath and RightSkill programs offer “competency-based learning model and direct assessment capabilities”, which drive student enrollment. Further, the company’s non-degree programs are designed to provide the U.S. working force with the required skill, proving beneficial to most working adults and even employers.

To drive enrollment and awareness, the company has undertaken various brand-driven marketing strategies. The company has shifted toward long-term marketing, which has improved brand awareness. In addition, Capella Education’s WORKFORCE EDGE program is likely to contribute significantly to enrolment growth in 2017. The company’s strategic collaboration with organizations, community colleges and corporate, healthcare alliances also attract greater number of students.

Such initiatives and student-friendly curriculum might help Capella Education gain more students that will eventually boost revenues.
 
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