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For-profit educator expected to report lower profits

Analysts are bearish on the for-profit educator as traditional universities step up competition.

Adriene Hill: Now to higher-ed -- the for-profit kind. Apollo Group, which owns the University of Phoenix, is expected to announce earnings today. And analysts, well, they aren't expecting big things. The company's stock has already been downgraded.

Marketplace's Nancy Marshall-Genzer explains why.


Nancy Marshall-Genzer: People who follow Apollo’s stock are lowering their expectations -- a lot. Citigroup analyst James Samford cut his estimate of earnings per share for fiscal 2013 by 18 percent. Why? For-profit colleges are facing tough competition from traditional, brick and mortar universities, which are setting up their own online, long-distance degree programs.

James Samford: People are choosing the branded, traditional school versus the for-profit school. Apollo is the largest player so they have probably the most to lose.

New federal rules are also putting pressure on the for-profit colleges. The rules are meant to keep the schools’ students from defaulting on their loans.

Kevin Kinser teaches education at the State University of New York at Albany. He’s studied the for-profit schools’ decline.

Kevin Kinser:  They were in these double digit enrollment boosts.  And we’ve certainly seen the end of that.

The Apollo Group’s stock is down 20 percent just since the end of February.

In Washington, I’m Nancy Marshall-Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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