Wrapping up Q2 earnings, we look at the numbers and key takeaways for the education services stocks, including Bright Horizons (NYSE:BFAM) and its peers.
A whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.
The 8 education services stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.3% while next quarter’s revenue guidance was 0.7% below.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
While some education services stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.9% since the latest earnings results.
Best Q2: Bright Horizons (NYSE:BFAM)
Founded in 1986, Bright Horizons (NYSE:BFAM) is a global provider of child care, early education, and workforce support solutions.Bright Horizons reported revenues of $670.1 million, up 11.1% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with an impressive beat of analysts’ operating margin estimates and a solid beat of analysts’ earnings estimates.
Bright Horizons delivered the weakest performance against analyst estimates of the whole group. Interestingly, the stock is up 12.1% since reporting and currently trades at $132.59.
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Laureate Education (NASDAQ:LAUR)
Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ:LAUR) is a global network of higher education institutions.Laureate Education reported revenues of $499.2 million, up 8% year on year, outperforming analysts’ expectations by 3.2%. The business had a strong quarter with an impressive beat of analysts’ earnings estimates and a decent beat of analysts’ operating margin estimates.
The market seems content with the results as the stock is up 1.7% since reporting. It currently trades at $15.80.
Lincoln Educational (NASDAQ:LINC)
Established in 1946, Lincoln Educational (NASDAQ:LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.Lincoln Educational reported revenues of $102.9 million, up 16.1% year on year, exceeding analysts’ expectations by 2.3%. Still, it was a slower quarter as it posted a miss of analysts’ operating margin and earnings estimates.
Interestingly, the stock is up 7.1% since the results and currently trades at $12.48.
Adtalem (NYSE:ATGE)
Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.Adtalem reported revenues of $409.9 million, up 12.4% year on year. This print topped analysts’ expectations by 2.8%. Overall, it was a strong quarter as it also recorded a decent beat of analysts’ operating margin estimates and full-year revenue guidance beating analysts’ expectations.
Adtalem achieved the highest full-year guidance raise among its peers. The stock is down 1.6% since reporting and currently trades at $73.44.
Strategic Education (NASDAQ:STRA)
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ:STRA) is a career-focused higher education provider.Strategic Education reported revenues of $312.3 million, up 8.5% year on year. This result surpassed analysts’ expectations by 1.3%. Overall, it was a strong quarter as it also recorded a decent beat of analysts’ operating margin estimates.
The stock is down 27.7% since reporting and currently trades at $87.34.
This content was originally published on Stock Story
