Does Apollo Group’s Big Drop Present a Buying Opportunity?

With shares of Apollo Group Inc. (NASDAQ:APOL) trading at around $19.33, is APOL an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Apollo Group has been heading in the wrong direction for a couple of years. And it doesn’t look as though things are going to get better anytime soon. After posting earnings results after the bell yesterday, the stock initially popped, but it dropped 7.76 percent today because of lower guidance given during the conference call last night.

Revenue came in at $1.06 billion, and EPS came in at $1.22. Both beat estimates. Revenue was expected to come in a $1.03 billion, and EPS was expected to come in at $0.90. In regards to guidance, revenue expectations for 2013 are now between $3.65 billion and $3.75 billion. This is slightly lower than the original expectation of $3.65 billion and $3.75 billion.

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Apollo Group’s enrollments have dropped over 30 percent since 2010. The company plans on focusing more on new enrollments, but turning this story around will take a lot more than just focus. Challenges include increased marketing expenses, tuition freezes, and increased grant programs. On the positive side, restructuring is expected to save Apollo Group $300 million over the next three years.

Let’s take a look at some important numbers for Apollo Group.