Grand Canyon Education Aces First Big Earnings Test Since Revamp

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Grand Canyon Education (LOPE) easily beat earnings and revenue estimates in its first report since selling off Grand Canyon University, which has reverted to nonprofit status.

Estimates: Wall Street expects EPS to tick up 4% to 86 cents, according to Zacks Investment Research. Revenue is seen tumbling 35% to $141 million.

Results: EPS of 95 cents on revenue of $236.8 million. End-of-period enrollment increased 9.6% from a year ago, as online enrollment rose 10.1% and ground enrollment grew 3.9% over the prior year. Piper Jaffray was looking for total enrollment growth of at least 8.6%.

Outlook: The company sees Q3 EPS of 98 cents, below consensus of $1.04, on revenue of $153 million, matching consensus. The company sees Q4 EPS of $1.40, above consensus for $1.32, on revenue of $175 million, matching consensus.

Stock: Shares closed up 0.1% at 118.31 on the stock market today. Industry group leader Chegg (CHGG) rose 1.5%, while Chinese stock TAL Education Group (TAL) lost 0.6% and peer New Oriental Education (EDU) fell 1.4%.

A good earnings beat could propel the Grand Canyon Education stock upward. It is currently just above buy range after breaking out from a six-week flat base with a correct entry of 111.51 on May 29, MarketSmith analysis shows. It is trading above its 50-day line, a key technical support, however its relative strength line has been moving sideways.

Nasdaq-listed Grand Canyon Education currently holds second place in the Consumer Services-Education industry group. Its strong fundamentals are reflected in its excellent IBD Composite Rating of 97, which puts it in the top 3% of stocks. In addition, its EPS Rating of 90, which measures earnings per share growth on both a current and annual basis, is also impressive.