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K12, Inc. Message Board

  • lawwman719 lawwman719 Jan 14, 2011 6:49 AM Flag

    Another Brick in the Moat

    An agreement with George Washington University was announced yesterday and if you take a step back and look at the affiliations developed over the last year, you will see a strong company being built!! They have the money, talent, and backing to grow into a major factor in their field!! Patience will be rewarded!!

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    • Sometimes I worry that this Company is a little too good at press releases. While I suppose that the GW deal is not a bad thing, I am not sure how it moves the needle. First, it is private. This means that parents will have to pay tuition - it is not publicly funded like most of K12's charter schools. Second, K12 already offered a private school option so the only thing this adds is the GW brand. This is fine if GW is just letting K12 serve up their existing products, however, as an elite university, my guess is that they will require some customization. Bottom line is that maybe they will get a few hundred students, but doubt that this will have much impact on the bottom line. Meanwhile, expectations are still high for Q2 - Consensus is $0.33 - seems high since only $0.07 in Q1. This is the highest multiple stock in education and they weren't punished at all for a huge Q1 miss. Agree with your patience comment, but would still like to take advantage of a Q2 sell-off.

      • 1 Reply to malvernj
      • The Q1 miss was punished when the stock dropped from $27 to $25. However, most people realize that the reason for the earnings miss was lots of cap ex, and it most likely was an one time event. So going forward sales and earnings should increase. Of course the show me the money moment will come when they release Q2 earnings in two months. If expenditures are still high, then I'm sure there will be a sell off.

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