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Grand Canyon Education's shares soar

The Associated Press

Grand Canyon Education Inc.'s shares soared Wednesday after the for-profit education company reported first-quarter results that far exceeded market expectations, and it issued a strong full-year forecast.

THE SPARK: The Phoenix-based company, which offers both on-campus and online courses, reported after the market closed Tuesday that its net income increased nearly 45 percent to $20.9 million, or 46 cents per share, from $14.5 million, or 32 cents per share in the prior year. It earned 43 cents per share on an adjusted basis.

Revenue increased 21 percent to $142 million from $117.1 million last year, as enrollment increased.

Analysts polled by FactSet, on average, were expecting the company to earn 39 cents per share, on revenue of $137.9 million.

Grand Canyon also said that it expects to earn between $1.76 and $1.79 per share for the year on revenue between $577.5 million and $583.5 million. Analysts were anticipating earnings of $1.72 per share on revenue of $577.2 million.

THE BIG PICTURE: Grand Canyon is one of the smaller for-profit education companies, but its results were a big bright spot for the sector. Enrollment at for-profit education schools soared when the recession first hit but increased scrutiny, new federal regulations and the drag of the still tough economy have cut into enrollment.

Grand Canyon said that its enrollment increased nearly 16 percent for the quarter to 53,600 students.

THE ANALYSIS: BMO Capital Markets analyst Jeffrey Silber said the company's revenue gains were some of the best year-over-year growth in the sector. He also noted that Grand Canyon's operating margins were above both the company's and the market's expectations. The analyst said that the company's competitive and unique position helps buck the overall weak industry trends.

Silber maintained an "Outperform" rating on the company's shares.

SHARE ACTION: Shares held onto a gain of $3.56, nearly 14 percent, to $29.38, in afternoon trading, after hitting $29.82 earlier in the day, an all-time trading high for the company, which went public in 2008. Its stock value has increased more than 65 percent since this time last year.