Broadband and hardware technology has so progressed in the past 10 years that Internet usage in the American home has jumped from 40 percent at the turn of the century to an astounding 80 percent today. We use our computers to do everything from shop online to attend college. In fact, the online education sector of the market has seen phenomenal growth during the increased Internet penetration of the last decade and it shows no signs of slowing down. One in three students take online courses today and that statistic will soon hit one in two. Companies that specialize in online classes for graduate and undergraduate students are in one of the fastest growing niches in the market and among the most successful businesses. This article reviews one of the better small-cap choices, Grand Canyon Education Inc. (NASDAQ: LOPE).
LOPE provides online postsecondary educational services on the postgraduate and graduate levels. Offerings aside, what may be most attractive to investors is that this is a discount stock with a low PEG of .80. So here are some numbers to consider as you look at this play.
LOPE has a low debt equity of only 0.13 and an extremely low forward P/E of 13.90. The company shows strong growth on all key parameters with the average annual earnings growth for the past five years at a whopping 257.09 percent. Annual sales growth for the past five years was also especially high at 42.70 percent. Earnings growth estimates for the next five years is, again, high at 20.83 percent. Of the twelve analysts covering the stock, seven rate it as a strong buy, four rate it as a buy and only one rates it as a hold.
Q3 2012 numbers look very nice indeed. Net revenue increased 22.6 percent. Operating income increased by 51 percent and operating margin was 23.4 percent compared to same quarter 2011 of 19 percent. Net income was up 43.5 percent and diluted net income per share was $0.41 as opposed to $0.29 for Q3 2011.
Colorado Canyon is an attractive prospect when you take into consideration the very low multiples, high growth and growth potential, along with analyst’s recommendations. Numbers rarely lie and this is one play that the stars are in alignment with. The company has a market cap of $1.12 billion and is currently trading at $25.07.