Grand Canyon Education, Inc. (NASDAQ: LOPE)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001434588
Market Cap 4.62 Bn
P/B 6.09
P/E 21.85
P/S 4.23
ROIC (Qtr) 22.09
Div Yield % 0.00
Rev 1y % (Qtr) 9.59
Total Debt (Qtr) 110.53 Mn
Debt/Equity (Qtr) 0.15
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About

Grand Canyon Education, Inc., also known as GCE, operates as a publicly traded education services company in the United States. The company's ticker symbol is LOPE, and it is a prominent player in the education services market. GCE specializes in providing technology and academic services, marketing and communication services, back-office services, and social responsibility and human capital development initiatives to its university partners. The company is committed to serving colleges and universities and has developed significant technological...

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Investment thesis

Bull case

  • Strong operating cash flow of 278.82M provides robust 2.52x coverage of total debt 110.53M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 97.28M provide 6.85x coverage of short-term debt 14.20M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 718.38M provides 6.50x coverage of total debt 110.53M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 278.82M provides strong 20.23x coverage of stock compensation 13.78M, indicating sustainable incentive practices.
  • Robust free cash flow of 241.62M exceeds capital expenditure of 37.20M by 6.49x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 278.82M barely covers its investment activities of (215.55M), with a coverage ratio of -1.29, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 278.82M is outpaced by equity issuance of (229.58M) (-1.21 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 272.65M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Cash position of 97.28M provides minimal 0.36x coverage of SG&A expenses of 272.65M, indicating potential operational inflexibility in market downturns.
  • Fixed assets of 279.88M showing 7.15x ratio to depreciation of 39.17M indicates aging infrastructure requiring significant near-term capital investment.

Peer comparison

Companies in the Education & Training Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EDU New Oriental Education & Technology Group Inc. 9.35 Bn 24.58 1.82 0.78 Bn
2 TAL TAL Education Group 6.18 Bn 22.22 2.20 0.38 Bn
3 GHC Graham Holdings Co 5.47 Bn 12.27 1.91 1.17 Bn
4 LAUR Laureate Education, Inc. 5.20 Bn 25.55 3.29 0.44 Bn
5 LOPE Grand Canyon Education, Inc. 4.62 Bn 21.85 4.23 0.11 Bn
6 LRN Stride, Inc. 3.61 Bn 11.32 1.43 0.56 Bn
7 ATGE Covista Inc. 3.46 Bn 13.66 1.83 0.73 Bn
8 PRDO PERDOCEO EDUCATION Corp 2.84 Bn 42.39 1.73 0.06 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 4.39 0.71
EV to Cash from Ops. EV/CFO 16.26 6.80
EV to Debt EV to Debt 41.01 11.15
EV to EBIT EV/EBIT 16.66 112.78
EV to EBITDA EV/EBITDA 15.26 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 18.76 5.57
EV to Market Cap EV to Market Cap 0.98 582,173.64
EV to Revenue EV/Rev 4.16 1.74
Price to Book Value [P/B] P/B 6.09 -3.80
Price to Earnings [P/E] P/E 21.85 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 11.73
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.21
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.69
Interest Coverage Int. cover (Qtr) 0.00 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 2.52 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -63.09 25.11
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -6.11 -39.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -3.83 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) -5.59 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) -5.59 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) -2.75 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) 3.99 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.78 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.06 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.71 0.73
Current Ratio Curr Ratio (Qtr) 3.17 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.15 3.83
Interest Cover Ratio Int Coverage (Qtr) 0.00 53.05
Times Interest Earned Times Interest Earned (Qtr) 0.00 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 28.50 -30.62
EBIT Margin % EBIT Margin % (Qtr) 24.94 -82.13
EBT Margin % EBT Margin % (Qtr) 24.94 -47.07
Gross Margin % Gross Margin % (Qtr) 53.00 50.48
Net Profit Margin % Net Margin % (Qtr) 19.40 -48.61