Why Grand Canyon Education Shares Popped

Why Grand Canyon Education Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Grand Canyon Education were climbing higher today, finishing up 11% after breezing past estimates in its third-quarter earnings report.

So what: The for-profit educator delivered a per-share profit of $0.49, better than estimates of $0.45, while revenues moved up 14.1% to $152.4 million, also topping expectations. Overall enrollment increased 14.7%, while new enrollment, often seen as the lifeblood of the industry, jumped 39.5%. Both are promising trends for Grand Canyon, and the company is expanding its campuses to accommodate the new inflow. The Christian postsecondary school also guided full-year EPS at $1.88, above analyst estimates at $1.81, while its net revenue projection of $594 million was slightly better than the consensus.

Now what: After struggling for the last two years, education stocks have largely bounced back this quarter as most have reported earnings above estimates and seem to see a bottom in a long-running trend of declining enrollment. Grand Canyon never really faced that problem, however, as shares have now tripled in the last two years. It's hard to say what separates it from the competition, but with 40% growth in new enrollment, it's clearly doing something right. If it can maintain that level, expect shares to move higher.

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