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Does Grand Canyon Education, Inc.'s (NASDAQ:LOPE) 13% Earnings Growth Reflect The Long-Term Trend?

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Understanding Grand Canyon Education, Inc.'s (NASDAQ:LOPE) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Grand Canyon Education is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.

See our latest analysis for Grand Canyon Education

How Did LOPE's Recent Performance Stack Up Against Its Past?

LOPE's trailing twelve-month earnings (from 31 December 2018) of US$229m has jumped 13% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 19%, indicating the rate at which LOPE is growing has slowed down. To understand what's happening, let’s take a look at what’s transpiring with margins and if the whole industry is facing the same headwind.

NasdaqGS:LOPE Income Statement, March 27th 2019
NasdaqGS:LOPE Income Statement, March 27th 2019

In terms of returns from investment, Grand Canyon Education has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 15% exceeds the US Consumer Services industry of 5.4%, indicating Grand Canyon Education has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Grand Canyon Education’s debt level, has declined over the past 3 years from 30% to 22%.

What does this mean?

Grand Canyon Education's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Grand Canyon Education to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for LOPE’s future growth? Take a look at our free research report of analyst consensus for LOPE’s outlook.

  2. Financial Health: Are LOPE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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