Can Education Management Meet These Numbers?

Education Management (Nasdaq: EDMC  ) is expected to report Q2 earnings on Jan. 30. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Education Management's revenues will decrease -11.7% and EPS will compress -61.2%.

The average estimate for revenue is $650.6 million. On the bottom line, the average EPS estimate is $0.19.

Revenue details
Last quarter, Education Management reported revenue of $609.6 million. GAAP reported sales were 11% lower than the prior-year quarter's $682.1 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Last quarter, non-GAAP EPS came in at -$0.04. GAAP EPS were -$0.11 for Q1 against $0.21 per share for the prior-year quarter.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Recent performance
For the preceding quarter, gross margin was 38.8%, 630 basis points worse than the prior-year quarter. Operating margin was 3.8%, 740 basis points worse than the prior-year quarter. Net margin was -2.1%, 610 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $2.48 billion. The average EPS estimate is $0.43.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 32 members out of 60 rating the stock outperform, and 28 members rating it underperform. Among 22 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), eight give Education Management a green thumbs-up, and 14 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Education Management is hold, with an average price target of $5.19.

Looking for alternatives to Education Management? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

• Add Education Management to My Watchlist.