Apollo Group Gets an A+ in private education

The private education sector has been hot lately. So, it should be no surprise that Apollo Group Inc. (NYSE: APOL), which operates the University of Phoenix, announced a particularly strong quarterly report.

Net income came to $180.4 million, which is a 29% increase. Revenues were up 24.4% to $971 million.

The key driver is improved enrollments. For example, degreed enrollments were up a hefty 18% to 384,900 (this was the third consecutive quarter of solid growth).

While Apollo has invested heavily in marketing and infrastructure, the fact remains that the fragile economy is helping with the growth. Simply put, people realize they need to enhance their education to compete in the soft labor market.

It's definitely lucrative for Apollo. Quarterly cash flows were $291 million, up 61%. In all, Apollo has $1 billion in the bank.

What to do with the largesse? First of all, the company sees opportunities in foreign markets. Also, it's a good bet that Apollo will engage in some M&A to bulk things up.

Yes, it's a nice position. And, investors are cherry about things. In today's trading, the shares are up 12.60% to $86.95

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.