photography of laptop computer camera smartphone headphones and mug

Grand Canyon Education Q3 Earnings: Can NasdaqGS:LOPE Hit Its $1.11 EPS Target?

in EARNINGS/INVESTING IDEAS by

Grand Canyon Education, Inc. (NasdaqGS:LOPE) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $1.11/share on revenue of $197.7 million. The consensus earnings per share (EPS) of $1.11/share is based on a poll of 5 analysts and represents a decline in eps of −10.5% over the same quarter last year, when the company reported earnings of $1.24/share.

The revenue forecast of $197.7 million based on a poll of 5 analysts implies a year-over-year (YoY) growth in revenue of 2.3%. Last year the company reported $193.3 million in revenue for the quarter.

Expected to report EPS contraction of −10.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $197.67 $193.29 2.3%
EPS $1.11 $1.24 −10.5%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Grand Canyon Education, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.89 $1.03 15.7% Beat
Q1, 2020 $1.50 $1.53 2.3% Beat
Q4, 2019 $1.54 $1.63 5.8% Beat
Q3, 2019 $1.15 $1.24 8.3% Beat
Q2, 2019 $0.94 $1.06 12.3% Beat
Q1, 2019 $1.50 $1.59 6.4% Beat
Q4, 2018 $1.42 $1.57 10.9% Beat
Q3, 2018 $0.99 $1.06 7.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 12.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $91.49 $102.49 12.0% Increase
May 7, 2020 $86.24 $92.41 7.2% Increase
February 19, 2020 $85.91 $82.23 −4.3% Decline
November 6, 2019 $91.81 $88.08 −4.1% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.24, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.24 implies a 1.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Grand Canyon Education, Inc. is currently trading at $77.52/share, down −5.4% for the day. The company is trading at approximately 73.6% of its 52-week high of $106.14/share. The company’s stock price is down −24.4% since the last earnings report and down −4.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 46.34 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:LOPE Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 14.35 and a forward P/E multiple of 14.92.

Grand Canyon Education, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.44. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $77.52
P/E Ratio 14.3x
P/E Ratio (Fwd) 14.9x
PEG Ratio 1.6
Total Debt / Total Capital 4.2%
Levered Free Cash Flow $313.1 million
EV / EBITDA 12.1x

Finbox

Grand Canyon Education, Inc. is a mid-cap stock with a market capitalization of $3.841 billion and a total enterprise value of $3.824 billion. The company operates in the Consumer Discretionary sector and the Diversified Consumer Services industry.

Grand Canyon Education, Inc. provides education services to colleges and universities in the United States. The company’s technology services include learning management system, internal administration, infrastructure, and support services; academic services comprises program and curriculum, faculty and related training and development, class scheduling, and skills and simulation lab sites; and counseling services and support include admission, financial aid, and field experience counseling services. It also offers marketing and communication services, such as lead acquisition, digital communications strategy, brand identity, media planning and strategy, video, and data science and analysis services; and back office services comprising finance and accounting, human resources, audit, procurement services. The company, through its subsidiary, Orbis Education Services, LLC, supports healthcare education programs for 22 universities. Grand Canyon Education, Inc. was founded in 1949 and is based in Phoenix, Arizona.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.