Wrapping up Q2 earnings, we look at the numbers and key takeaways for the education services stocks, including Lincoln Educational (NASDAQ:LINC) 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.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Amidst this news, education services stocks have had a rough stretch. On average, share prices are down 5.6% since the latest earnings results.
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. This print exceeded analysts’ expectations by 2.3%. Despite the top-line beat, it was still a mixed quarter for the company with a miss of analysts’ operating margin and earnings estimates.
“We continued our strong performance during the second quarter with revenue growing 16.1%, student starts increasing 12.3% and adjusted EBITDA more than doubling compared to last year,“ commented Scott Shaw, President & CEO.
Lincoln Educational scored the fastest revenue growth of the whole group. The stock is up 8% since reporting and currently trades at $12.58.
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Best Q2: 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.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $15.38.
Perdoceo Education (NASDAQ:PRDO)
Formerly known as Career Education Corporation, Perdoceo Education (NASDAQ:PRDO) is an educational services company that specializes in postsecondary education.Perdoceo Education reported revenues of $166.7 million, down 10.6% year on year, exceeding analysts’ expectations by 3.6%. Still, it was a mixed quarter as it posted underwhelming earnings guidance for the full year.
Perdoceo Education delivered the biggest analyst estimates beat but had the slowest revenue growth in the group. As expected, the stock is down 14.4% since the results and currently trades at $21.27.
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 number was in line with analysts’ expectations. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ operating margin estimates and a solid beat of analysts’ earnings estimates.
Bright Horizons had the weakest performance against analyst estimates among its peers. The stock is up 9.9% since reporting and currently trades at $130.01.
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 surpassed analysts’ expectations by 2.8%. Overall, it was a strong quarter as it also produced a decent beat of analysts’ operating margin estimates and full-year revenue guidance beating analysts’ expectations.
Adtalem scored the highest full-year guidance raise among its peers. The stock is down 2.5% since reporting and currently trades at $72.77.
This content was originally published on Stock Story
