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Grand Canyon Education, Inc. Just Beat EPS By 5.7%: Here's What Analysts Think Will Happen Next

Simply Wall St
·4 min read

It's been a good week for Grand Canyon Education, Inc. (NASDAQ:LOPE) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.4% to US$81.84. The result was positive overall - although revenues of US$198m were in line with what the analysts predicted, Grand Canyon Education surprised by delivering a statutory profit of US$1.11 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Grand Canyon Education

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Following the latest results, Grand Canyon Education's four analysts are now forecasting revenues of US$922.6m in 2021. This would be a solid 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to climb 18% to US$6.15. Before this earnings report, the analysts had been forecasting revenues of US$926.7m and earnings per share (EPS) of US$6.06 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$113. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Grand Canyon Education analyst has a price target of US$122 per share, while the most pessimistic values it at US$105. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Grand Canyon Education's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 13%, well above its historical decline of 1.0% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 24% per year. Although Grand Canyon Education's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Grand Canyon Education's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Grand Canyon Education analysts - going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Grand Canyon Education that you need to be mindful of.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.