School Stocks' Earnings Lineup for Nov 1: BFAM, ATGE & ONE
School/for-profit education companies are gaining from the friendly approach of the Trump administration, dynamic cost-cutting measures via significant layoffs and campus closings, investment in digital capabilities and stepping up social media efforts to augment their brand value as well as boost enrolment growth. Additionally, the companies are improving their technology and infrastructure, increasing investments to improve academic quality and retain students, buying complementary businesses, along with regularly introducing new programs and specializations to boost student outcomes.
For-profit education companies finally seem to be winning their battle against the Obama-era regulations that pushed a few key players into bankruptcy, while the others saw their stock prices and enrollment plunging. Apprehensions stemming from tuition rates, mounting student loan debt and post-graduation employment success drove regulations that forced the closure of many programs hosting hundreds of thousands of students.
However, the Trump administration’s business-friendly approach has provided the much-needed regulatory support that helped many of the top for-profit colleges to change their prospects.
Apart from the much-needed regulatory support, industry giants are also finding innovative ways to compete in an increasingly competitive education landscape and deliver returns to its shareholders.
The business climate for publicly-traded companies like Grand Canyon Education (LOPE), Strategic Education (STRA) and Career Education (CECO) is improving of late. Recently, the drive boosted online curriculum provider K12 Inc. (LRN). Textbook giant Chegg, Inc. (CHGG) also experienced a significant headway as it reshaped itself more as an educational software services provider.
Q3 Expectation
Per Earnings Trends report dated Oct 24, the consumer discretionary sector, which houses the school industry, is one of the sectors poised to record growth among the 16 broad sectors in the third quarter. The sector’s earnings are expected to grow 9.2% from third-quarter 2017 and the top line is likely to improve 7.7% from the year-ago level.
School Stocks Reporting on Nov 1
Three companies from the school industry are set to report quarterly results on Nov 1. Let's see how things are shaping up for their respective announcements.
Our research shows that the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Bright Horizons Family Solutions Inc. BFAM, engaged in providing employer-sponsored child care, early education and work/life solutions, is slated to release third-quarter 2018 results after the closing bell.
The company delivered a positive surprise of 2.4% in the last reported quarter. In fact, the company topped the consensus mark in two of the past four quarters, recording an average positive surprise of 3.2%.
We cannot conclusively predict a beat for the company in the quarter to be reported as it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has been experiencing higher revenues and gross profit, courtesy of contributions from enrollment gains in mature and ramping centers, new child care centers, back-up dependent care and educational advisory clients, along with strong cost management.
Overall, for the third quarter, the Zacks Consensus Estimate for earnings is pegged at 73 cents, reflecting a 17.7% year-over-year increase. Meanwhile, the consensus estimate for revenues is pegged at $471.7 million, implying a 8.9% increase.
Bright Horizons Family Solutions Inc. Price and EPS Surprise
Bright Horizons Family Solutions Inc. Price and EPS Surprise | Bright Horizons Family Solutions Inc. Quote
Adtalem Global Education ATGE, a leading global education provider, is scheduled to release first-quarter fiscal 2019 results after the closing bell.
The company delivered a negative surprise of 4.4% in the last reported quarter. In fact, the company missed estimates in two of the past four quarters, resulting in an average negative surprise of 9.8%.
We cannot conclusively predict a beat for the company in the fiscal first quarter as it has an Earnings ESP of 0.00% and a Zacks Rank #3.
Overall, for the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at 41 cents, reflecting a 36.7% year-over-year increase. The consensus estimate for revenues is pegged at $296.1 million, implying a 29.7% decrease.
The company expects revenues to grow approximately 1% year over year in the quarter, primarily on the back of solid contribution from the Medical and Healthcare segment.
Adtalem Global Education Inc. Price and EPS Surprise
Adtalem Global Education Inc. Price and EPS Surprise | Adtalem Global Education Inc. Quote
OneSmart International Education Group Limited ONE, the largest premium K-12 after-school education service provider in China, is slated to release the fourth quarter of fiscal 2018 results before the opening bell.
The company delivered a positive surprise of 30.8% in the last reported quarter. However, we cannot conclusively predict a beat for the company in the fiscal fourth quarter as it has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Overall, for the fiscal fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 7 cents.
OneSmart International Education Group Limited Price and EPS Surprise
OneSmart International Education Group Limited Price and EPS Surprise | OneSmart International Education Group Limited Quote
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