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Category: Stock Market and Grand Canyon Education
Date: 20 February 2020 Stock Price: $86.93 We take a look at the latest earnings report of Grand Canyon Education, an education services company with more 103 100 students enroll cross nine colleges both online and on ground at its campus in Phoenix, Arizona
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About Grand Canyon Education
Grand Canyon Education, Inc., a Delaware corporation ("GCE" or the "Company) is a publicly traded education services company dedicated to serving colleges and universities. GCE has developed significant technological solutions, infrastructure and operational processes to provide services to these institutions on a large scale. GCE's most significant university partner is Grand Canyon University ("GCU"), a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across nine colleges both online and on ground at its campus in Phoenix, Arizona. As of December 31, 2019, GCE provided education services and support to more than 103,100 students enrolled in GCU's programs, emphases and certificates.
In January 2019, GCE began providing education services to numerous university partners across the United States through our wholly owned subsidiary, Orbis Education Services LLC ("Orbis Education"), which we acquired on January 22, 2019 for $361.2 million, net of cash acquired (the "Acquisition"). Orbis Education works in partnership with a growing number of top universities and healthcare networks across the country to develop high-quality, career-ready graduates in four primary academic programs to meet the healthcare industry's demands. Therefore, the results of operations for the three-month and year end periods ended December 31, 2019 include Orbis Education's financial results for the period from January 22, 2019 to December 31, 2019. As a result of the Acquisition, we incurred transaction costs of $4.0 million and amortization of intangible assets acquired of $8.2 million in the year ended December 31, 2019. As of December 31, 2019, Orbis Education provides education services to 22 university partners, in 24 locations, in 20 states throughout the country.
In January 2019, GCE began providing education services to numerous university partners across the United States through our wholly owned subsidiary, Orbis Education Services LLC ("Orbis Education"), which we acquired on January 22, 2019 for $361.2 million, net of cash acquired (the "Acquisition"). Orbis Education works in partnership with a growing number of top universities and healthcare networks across the country to develop high-quality, career-ready graduates in four primary academic programs to meet the healthcare industry's demands. Therefore, the results of operations for the three-month and year end periods ended December 31, 2019 include Orbis Education's financial results for the period from January 22, 2019 to December 31, 2019. As a result of the Acquisition, we incurred transaction costs of $4.0 million and amortization of intangible assets acquired of $8.2 million in the year ended December 31, 2019. As of December 31, 2019, Orbis Education provides education services to 22 university partners, in 24 locations, in 20 states throughout the country.
Overview of Grand Canyon's 4th quarter 2019 earnings release
The data below refers to the latest quarter unless specified otherwise
- Revenue: $213.247 million (up from $177.548 million for the same quarter of the previous year)
- Revenue increased by 20.1% over the last 12 months
- Costs and expenses: $131.275 million (up from $97.399 million for the same quarter of the previous year)
- Costs and expenses increased by 34.78% over the last 12 months.
- Margin squeeze being experienced by Grand Canyon Education is the group's revenues increased at a slower rate than their costs and expenses
- Net income: $76.669 million (up from $75.531 million for the same quarter of the previous year)
- Diluted income per share: $1.59 (up from $1.56 for the same quarter of the previous year)
- PE ratio of Grand Canyon Education: 16.2
- Diluted weighted number of shares outstanding: 48.112 million (down from 48.422 million for the same quarter of the previous year)
- Cash and cash equivalents: $122.272 million
- Cash and cash equivalents per share: $2.54
- Cash and cash equivalents makes up 7.2% of Grand Canyon Education's market capital
- Cash and cash equivalents makes up 7.2% of Grand Canyon Education's total assets
- Receivables, net: $48.939 million
- Receivables makes up 2.8% of Grand Canyon Education's total assets
- Stockholders equity in Grand Canyon Education: $1.443 billion
- Stockholders equity per share in Grand Canyon Education: $29.99
- So Grand Canyon Education is trading at 2.89 times its stockholders equity per share which is within the expected range of between 2 and 4 times that most firms tend to trade at
- Cash generated from operations (for full fiscal 2019): $306.344 million
- Cash generated from operations per share (for fiscal 2019): $6.36
Grand Canyon Education (NASDAQ:LOPE) management commentary on their earnings
PHOENIX, Feb. 19, 2020 /PRNewswire/ -- Grand Canyon Education, Inc. (NASDAQ: LOPE), ("GCE" or the "Company"), is a publicly traded education services company that currently provides services to 23 university partners. GCE provides a full array of support services in the post-secondary education sector and has developed significant technological solutions, infrastructure and operational processes to provide superior services in these areas on a large scale. GCE today announced financial results for the quarter and the year ended December 31, 2019.
During 2019, we financed our Acquisition of Orbis Education for $361.2 million, net of cash acquired, from an increase in our credit facility of $190.1 million and the use of $171.1 million of operating cash on hand. Our unrestricted cash and cash equivalents and investments were $143.9 million at December 31, 2019. As of December 31, 2019, we had $300,000 of restricted cash and cash equivalents, for pledged collateral for a site lease
During 2019, we financed our Acquisition of Orbis Education for $361.2 million, net of cash acquired, from an increase in our credit facility of $190.1 million and the use of $171.1 million of operating cash on hand. Our unrestricted cash and cash equivalents and investments were $143.9 million at December 31, 2019. As of December 31, 2019, we had $300,000 of restricted cash and cash equivalents, for pledged collateral for a site lease
GCE announced today that the Company's Board of Directors has increased the authorization under its existing stock repurchase program by $75.0 million to a total of $250.0 million. The Company had less than $43.6 million left under its $175.0 million authorization. The new authorization allows the Company to repurchase from time to time at management's discretion up to an additional $75.0 million of the Company's common stock during the period ending December 31, 2020, unless such period is extended or shortened by the Board of Directors. As of February 14, 2020, the Company had 48,165,704 million shares of common stock outstanding. The plan permits the Company to make purchases in the open market at prevailing market prices or in privately negotiated transactions in compliance with applicable securities laws and other legal requirements. The level of purchase activity is subject to market conditions and other investment opportunities. The plan does not obligate GCE to acquire any particular amount of common stock and may be suspended or discontinued at any time. The repurchase program may be funded using the Company's available cash and revolving credit facility. As of December 31, 2019, the Company had unrestricted cash and cash equivalents and investments of $143.9 million and a revolving credit facility of $150.0 million.
2020 Outlook
Q1 2020:
Net revenue of $222.5 million; As Adjusted Operating Margin 37.0%; Diluted EPS of $1.53 using 48.0 million diluted shares
Q2 2020:
Net revenue of $188.5 million; As Adjusted Operating Margin 27.3%; Diluted EPS of $1.03 using 47.9 million diluted shares
Q3 2020:
Net revenue of $210.0 million; As Adjusted Operating Margin 33.3%; Diluted EPS of $1.33 using 48.0 million diluted shares
Q4 2020:
Net revenue of $235.0 million; As Adjusted Operating Margin 39.1%; Diluted EPS of $1.69 using 48.1 million diluted shares
Full Year 2020:
Net revenue of $856.0 million; As Adjusted Operating Margin 34.5%; Diluted EPS of $5.58 using 48.0 million diluted shares
2020 Outlook
Q1 2020:
Net revenue of $222.5 million; As Adjusted Operating Margin 37.0%; Diluted EPS of $1.53 using 48.0 million diluted shares
Q2 2020:
Net revenue of $188.5 million; As Adjusted Operating Margin 27.3%; Diluted EPS of $1.03 using 47.9 million diluted shares
Q3 2020:
Net revenue of $210.0 million; As Adjusted Operating Margin 33.3%; Diluted EPS of $1.33 using 48.0 million diluted shares
Q4 2020:
Net revenue of $235.0 million; As Adjusted Operating Margin 39.1%; Diluted EPS of $1.69 using 48.1 million diluted shares
Full Year 2020:
Net revenue of $856.0 million; As Adjusted Operating Margin 34.5%; Diluted EPS of $5.58 using 48.0 million diluted shares
Grand Canyon Education (NASDAQ: LOPE) stock price history
The image below obtained from Google, shows the stock price history of Grand Canyon Education (NASDAQ:LOPE) for the last 5 years.Its been a pretty good time for Grand Canyon stockholders over the last 5 years. 5 years ago the stock of Grand Canyon Education was trading at $46.70 and its currently trading at $86.93 a stock. That's a healthy return of 84.5% provided to Grand Canyon Education stockholders over the last 5 years.
Grand Canyon Education stock is trading at a lot closer to its 52 week low of $76.48 than it is to its 52 week high of $132.72 which to us is a clear indication that the short term sentiment and momentum of Grand Canyon Education stock is negative at this point in time
Grand Canyon Education stock is trading at a lot closer to its 52 week low of $76.48 than it is to its 52 week high of $132.72 which to us is a clear indication that the short term sentiment and momentum of Grand Canyon Education stock is negative at this point in time
Recent coverage of Grand Canyon Eduction
The extract below covers the latest regarding Walmart as obtained from wtvm.com
PHOENIX (AP) _ Grand Canyon Education Inc. (LOPE) on Wednesday reported fourth-quarter earnings of $76.7 million. On a per-share basis, the Phoenix-based company said it had profit of $1.59. Earnings, adjusted for one-time gains and costs, came to $1.63 per share. The for-profit education company posted revenue of $213.2 million in the period.
For the year, the company reported profit of $259.2 million, or $5.37 per share. Revenue was reported as $778.6 million. For the current quarter ending in April, Grand Canyon Education said it expects revenue in the range of $222.5 million. The company expects full-year earnings to be $5.58 per share, with revenue expected to be $856 million. Grand Canyon Education shares have decreased 9% since the beginning of the year. In the final minutes of trading on Wednesday, shares hit $86.93, a decrease of 10% in the last 12 months.
Read the full article here
PHOENIX (AP) _ Grand Canyon Education Inc. (LOPE) on Wednesday reported fourth-quarter earnings of $76.7 million. On a per-share basis, the Phoenix-based company said it had profit of $1.59. Earnings, adjusted for one-time gains and costs, came to $1.63 per share. The for-profit education company posted revenue of $213.2 million in the period.
For the year, the company reported profit of $259.2 million, or $5.37 per share. Revenue was reported as $778.6 million. For the current quarter ending in April, Grand Canyon Education said it expects revenue in the range of $222.5 million. The company expects full-year earnings to be $5.58 per share, with revenue expected to be $856 million. Grand Canyon Education shares have decreased 9% since the beginning of the year. In the final minutes of trading on Wednesday, shares hit $86.93, a decrease of 10% in the last 12 months.
Read the full article here
Grand Canyon Education (NASDAQ: LOPE) stock valuation
So what do we believe Grand Canyon Education's stock is worth after their latest earnings report and their fiscal guidance provided? Our valuation model provides a target (full value) price for Grand Canyon Education's stock at $89.30 a stock.
We therefore believe the stock of Grand Canyon Education is close to fully valued at its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $89.30. A good entry point into Grand Canyon Education would therefore be at $80.40 or below. We expect the stock of Grand Canyon Education to trade in a narrow range around our target price in coming weeks and months.
We therefore believe the stock of Grand Canyon Education is close to fully valued at its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $89.30. A good entry point into Grand Canyon Education would therefore be at $80.40 or below. We expect the stock of Grand Canyon Education to trade in a narrow range around our target price in coming weeks and months.
Next earnings release of Grand Canyon Education
It is expected that Grand Canyon Education will release their 1st quarter 2020 earnings report towards the end of May 2020