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Grand Canyon Education (LOPE)
NASDAQ:LOPE
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Grand Canyon Education
(NASDAQ:LOPE)
72Outperform
Positive Factors
Analyst Rating
Analyst reiterates OUTPERFORM rating and raises the price target to $205.
Revenue Performance
Q4/24 revenue increased 5.1% to $292.6 million, surpassing expectations.
Valuation
The stock is trading at a discount to its Ed Tech peer group, making it more attractive based on current valuations.
Negative Factors
Enrollment Growth
3Q mixed with revenue slightly below expectations and Online new enrollment growth slower.
Revenue Guidance
Initial 2025 revenue guidance is slightly below consensus expectations.
Grand Canyon Education (LOPE) vs. S&P 500 (SPY)
Market Cap
$5.00B
Dividend YieldN/A
Average Volume (3M)237.08K
Price to Earnings (P/E)22.5
Beta (1Y)1.03
Revenue Growth7.50%
EPS Growth13.70%
CountryUS
Employees4,092
SectorConsumer Defensive
Sector Strength86
IndustryEducation & Training Services
Share Statistics
EPS (TTM)7.74
Shares Outstanding28,724,846
10 Day Avg. Volume290,332
30 Day Avg. Volume237,081
Financial Highlights & Ratios
PEG Ratio1.64
Price to Book (P/B)N/A
Price to Sales (P/S)4.69
Price to Cash Flow (P/CF)8.90
P/FCF Ratio8.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$199.33Price Target Upside17.04% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Grand Canyon Education Business Overview & Revenue Model
Company DescriptionGrand Canyon Education, Inc. (LOPE) is a provider of educational services, primarily focusing on online post-secondary education. The company operates in the education sector, delivering a wide range of programs and services aimed at supporting higher education institutions. Its core services include academic program management, recruitment and enrollment, and student retention services. Grand Canyon Education is known for its partnership with Grand Canyon University, where it offers its expertise in educational management to enhance the university's operational effectiveness.
How the Company Makes MoneyGrand Canyon Education makes money primarily through service agreements with higher education institutions. The company's revenue model is centered around providing comprehensive educational services, including curriculum development, marketing, and technology solutions. A significant portion of its revenue is derived from its long-term partnership with Grand Canyon University, where it manages various operational aspects of the university in exchange for a percentage of tuition and fee revenues. Additionally, the company may engage in other partnerships or service agreements with educational institutions to expand its client base and diversify its revenue streams.
Grand Canyon Education Financial Statement Overview
Summary
Grand Canyon Education has shown strong revenue growth and operational efficiency. The balance sheet is stable with healthy equity and debt ratios, and cash flow management is robust. However, increasing debt and an unexplained zero revenue anomaly in 2024 are concerns.Income Statement
Grand Canyon Education has demonstrated consistent revenue growth over the years, with a notable increase in revenue from 2019 to 2023. The company maintains strong EBIT and EBITDA margins, indicating operational efficiency. However, the net profit margin experienced a slight decline in recent years, which could be a point of concern. The inability to calculate the gross profit margin for 2024 due to zero revenue is an anomaly that needs clarification.72
Positive
Balance Sheet
The company's balance sheet reflects stability with a healthy equity ratio and a manageable debt-to-equity ratio. The return on equity is strong, showing effective use of shareholders' equity. The consistent increase in stockholders' equity over the years is a positive indicator of financial health. However, the increase in total debt from 2020 to 2024 warrants attention.78
Positive
Cash Flow
Grand Canyon Education exhibits robust cash flow from operations, with free cash flow growing steadily over the years. The operating cash flow to net income ratio indicates strong cash generation relative to net income. The free cash flow to net income ratio is also favorable, reflecting efficient cash management. The fluctuations in investing cash flow suggest strategic investments that could benefit future growth.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.03B | 960.90M | 911.31M | 896.56M | 844.10M | Gross Profit |
| 1.02B | 503.71M | 487.50M | 515.31M | 493.55M | EBIT |
| 275.40M | 249.26M | 237.50M | 282.19M | 277.44M | EBITDA |
| 327.87M | 291.68M | 271.30M | 364.75M | 307.09M | Net Income Common Stockholders |
| 226.23M | 204.99M | 184.68M | 260.34M | 257.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 324.62M | 244.51M | 181.70M | 600.94M | 256.61M | Total Assets |
| 1.02B | 930.46M | 832.75M | 1.22B | 1.84B | Total Debt |
| 108.52M | 99.28M | 77.44M | 61.18M | 171.78M | Net Debt |
| -216.10M | -47.19M | -42.97M | -539.76M | -73.99M | Total Liabilities |
| 234.57M | 212.45M | 195.13M | 177.70M | 270.25M | Stockholders Equity |
| 783.85M | 718.01M | 637.62M | 1.05B | 1.57B |
| Cash Flow | Free Cash Flow | |||
| 252.71M | 198.23M | 185.19M | 283.73M | 278.88M | Operating Cash Flow |
| 289.96M | 243.66M | 220.82M | 313.12M | 308.82M | Investing Cash Flow |
| 61.37M | -80.47M | -97.14M | 950.98M | -19.35M | Financing Cash Flow |
| -173.18M | -137.12M | -604.21M | -908.93M | -166.28M |
Grand Canyon Education Technical Analysis
Neutral
170.31
Price Trends
175.62
Negative
170.71
Negative
156.93
Positive
Market Momentum
-0.08
Negative
55.21
Neutral
69.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LOPE, the sentiment is Neutral. The current price of 170.31 is below the 20-day moving average (MA) of 171.68, below the 50-day MA of 175.62, and above the 200-day MA of 156.93, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 55.21 is Neutral, neither overbought nor oversold. The STOCH value of 69.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LOPE.
Grand Canyon Education Risk Analysis
Grand Canyon Education disclosed 38 risk factors in its most recent earnings report. Grand Canyon Education reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Grand Canyon Education Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $3.97B | 19.85 | 14.63% | ― | 12.83% | 97.16% | |
79 Outperform | $5.82B | 22.36 | 22.95% | ― | 13.13% | 56.75% | |
72 Outperform | $5.00B | 22.50 | 30.13% | ― | 7.50% | 13.70% | |
70 Outperform | $6.85B | 48.27 | 11.26% | ― | 11.07% | 88.57% | |
68 Neutral | $1.12B | ― | -13.11% | ― | 9.27% | 34.66% | |
63 Neutral | $20.41B | 13.98 | -16.01% | 3.26% | 1.30% | 5.01% | |
45 Neutral | $52.94M | ― | -147.16% | ― | -13.78% | -5297.96% |
* Consumer Defensive Sector Average
Performance Comparison
LOPE
Grand Canyon Education
170.31
39.61
30.31%
ATGE
Adtalem Global Education
102.78
56.52
122.18%
LRN
Stride
133.74
74.61
126.18%
BFAM
Bright Horizons
115.88
6.71
6.15%
CHGG
Chegg
0.46
-6.69
-93.57%
COUR
Coursera
6.61
-6.49
-49.54%
Grand Canyon Education Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -7.45% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong growth in online and hybrid enrollments, successful expansion of nursing programs, and a robust stock repurchase program. However, these positives were offset by a slight decline in traditional campus enrollments, decreased operating margins, increased tax rates, and some regulatory and impairment challenges.Highlights
Online Enrollment Growth
Online enrollment growth was 7.1% for the quarter, slightly exceeding long-term objectives, with new starts up in mid-single digits.
Hybrid Campus Enrollment Increase
Hybrid campus enrollment increased by 14.9% year-over-year, excluding closed sites, indicating strong growth in this segment.
Nursing Program Expansion
The ABSN program has shown success with a completion rate of high 80s and a first-time NCLEX pass rate of approximately 90%.
Service Revenue Growth
Service revenue was $292.6 million for Q4 2024, up 5.1% from the previous year, driven by increased enrollments and revenue per student.
Stock Repurchase Program
The company announced a $200 million increase in its stock repurchase program, indicating confidence in its financial position.
Lowlights
Slight Decline in GCU Ground Campus Enrollment
New and total traditional campus enrollments were down slightly year-over-year in fall 2024.
Operating Margin Decrease
Operating margin for the quarter was 34.2%, down from 35.1% in the same period last year, due to various factors including impairment charges.
Higher State Income Taxes
The effective tax rate increased to 21.2% from 19.9% due to higher state income taxes, impacting net income.
Impairment Charges
The company booked $1.9 million in impairment and other charges related to software project write-offs and site closures.
Regulatory Challenges
The company continues to face regulatory challenges affecting capacity expansion at certain hybrid locations.
Company Guidance
During the Q4 2024 earnings call for Grand Canyon Education, several key metrics were highlighted. Online enrollment grew by 7.1%, slightly exceeding long-term goals, while hybrid enrollment increased by 14.9% year-over-year, excluding closed sites. Service revenue reached $292.6 million, marking a 5.1% increase from the previous year, primarily driven by a 5% increase in Grand Canyon University (GCU) enrollments and a 9.8% rise in university partner enrollments at off-campus sites. Operating income was $100 million with a margin of 34.2%, and net income rose by 1.4% to $81.9 million. The company anticipates mid-to-high single-digit growth in online enrollments and low-to-mid teens growth for hybrid campuses throughout 2025. GCE also repurchased approximately 416,497 shares for $64.8 million in Q4, with plans to continue aggressive share buybacks. Looking forward, GCE expects a slight decrease in revenue per student due to various factors, including contract modifications, but overall margins are anticipated to expand in the latter half of 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.