Continue Reading Below
Shares ofBridgepoint Education, Inc.(NYSE: BPI) were skyrocketing as the for-profit educator said first-quarter earnings flipped from a loss a year ago to a profit. As of 12:17 p.m. EDT, the stock was up 25.6%.
Bridgepoint, which operates the University of the Rockies and Ashford University, cruised past estimates on the top and bottom lines as revenue fell 3.4% to $129.5 million but still beat estimates at $124 million. Adjusted earnings per share, meanwhile, swung from a loss of $0.02 per share a year ago to a per-share profit of $0.23, crushing expectations at breakeven.
Image source: Bridgepoint Education.
Enrollment in the quarter dropped by 10% to 46,383, but instructional, admissions, and marketing costs also fell sharply in the quarter, by more than 10% combined, delivering the surge in profits.
Management did not provide a quote or guidance in the press release, so it's not immediately clear where the company sees this trend going. Investors, though, are cheering the significant cost-cutting, which should lead to a jump in profits through the year.
Declining enrollment remains a concerning sign, but the Trump administration is expected to be friendlier to the for-profit education industry than the Obama administration was, which could ease the negative trend in the industry.
While enrollment is the key trend to watch over the long term, earnings per share could jump to close to $1 this year if the company can maintain this level of cost-cutting.
10 stocks we like better than Bridgepoint EducationWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now...and Bridgepoint Education wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of May 1, 2017.