Capella Education 1Q profit rises 83 percent

Capella Education 1Q profit rises 83 percent

MINNEAPOLIS

For-profit school Capella Education Co. said Tuesday that its earnings rose 83 percent during the first quarter as more students enrolled, and the company boosted its outlook for 2010.

For-profit schools have had huge increases in revenue and earnings throughout the recession as students look to beef up resumes and learn new skills to compete in a weak job market.

For the three months ended March 31, the Minneapolis company earned $15.2 million, or 89 cents per share, compared with $8.3 million, or 49 cents per share, during the same period a year ago.

Revenue increased 32 percent to $101.2 million as total enrollment grew 32 percent to 37,178 students.

Analysts polled by Thomson Reuters had expected profit of 79 cents per share on revenue of $98.8 million.

Capella said it expects revenue to increase 26.5 percent to 28.5 percent in 2010, compared with a a prior forecast of 24.5 percent to 26.5 percent. That implies revenue of $423.3 million to $430 million, above Wall Street expectations of $421.8 million.

Baird analyst Amy Junker said Capella, with its emphasis on post-bachelor's degree programs, should not suffer a hit to earnings from regulatory changes proposed by the Department of Education. She raised her share price target to $125 from $114.

The Department of Education has proposed limiting graduates' student aid repayment costs to 8 percent of income. The proposal aims to ensure schools are not taking unqualified students or charging students for classes that will not help them land better-paying jobs.

Capella shares fell $58 cents to $93.87 in afternoon trading after earlier hitting a 52-week high of $95.58. The stock has ranged from $46.37 to $94.59 over the past year.



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