Wednesday, March 01, 2006

Apollo Group (APOL) Updated Analysis

We analyzed Apollo Group sometime back and liked the stock.

In this article, we liked the industry Apollo operated in and also its growth prospects. We noted however, that the stock is not cheap.

Yesterday, the company issues a profit warning for the current quarter. The earnings are expected to be 8-9% lesser than expected for the quarter. The revenues are going to lower by about 3%. The company has not given guidance for the rest of the year on this stock. The stock duly took a beating and lost approximately 15% of its value.

The stock is still not cheap after yesterday's drop. The expenses increased sharply at Apollo diluting earnings per share. The reason for increased expenses is not clear. It is also not clear if this is a one time event. The revenues are slightly lighter. It remains to be seen if the company is suffering from a resurgent economy (less need to retrain oneself as jobs are easier to come by) or some other fundamental shift. The report by the company in the second half of this month should provide more answers.

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