Apollo Group Inc (APOL), Bridgepoint Education Inc (BPI), Strayer Education Inc (STRA) – Don’t Be Fooled: This Industry Is Still in Decline

Ditto for Bridgepoint Education Inc (NYSE:BPI): the company’s own first-quarter revenue declined 11% year-over-year, and diluted earnings per share collapsed 27% from the first quarter of 2012.

Again, enrollments were the main cause of the company’s deteriorating financial performance. Total student enrollment at Bridepoint’s academic institutions dropped 17% from the first quarter last year.

Resist the temptation to catch these falling knives

Many investors are willing to wait for distressed companies to turn their businesses around in exchange for buying in at low prices. However, shareholders aren’t being paid to wait for this. None of these stocks pays a dividend. Strayer Education Inc (NASDAQ:STRA) was the last to do so, having suspended its $4.00 per share annual payout in 2012.

Some of these companies will focus on cost-cutting to try to eke out profits going forward. For example, in the wake of its last quarterly results, Apollo Group Inc (NASDAQ:APOL) announced it is targeting $300 million in cost cuts in fiscal 2013.

However, cost-cutting can only go so far. Continuing drops in student enrollments will virtually ensure lower revenue and profits in future quarters.

As a result, these stocks are not nearly as cheap as they seem. Unless they can each meaningfully turn their business around and get enrollments going in the right direction, there’s simply no need for investors to take the risk. There are plenty of stocks out there that are growing profits and rewarding investors with strong dividends. Save your hard-earned investing dollars for more deserving stocks.

The article Don’t Be Fooled: This Industry Is Still in Decline originally appeared on Fool.com and is written by Robert Ciura.

Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Bridgepoint Education. The Motley Fool owns shares of Bridgepoint Education. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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