Unpacking Q3 Earnings: Bright Horizons (NYSE:BFAM) In The Context Of Other Education Services Stocks
Wrapping up Q3 earnings, we look at the numbers and key takeaways for the education services stocks, including Bright Horizons (NYSE:BFAM) and its peers.
A whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.
The 8 education services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.2% while next quarter’s revenue guidance was in line.
Luckily, education services stocks have performed well with share prices up 10.1% on average since the latest earnings results.
Weakest Q3: Bright Horizons (NYSE:BFAM)
Founded in 1986, Bright Horizons (NYSE:BFAM) is a global provider of child care, early education, and workforce support solutions.
Bright Horizons reported revenues of $719.1 million, up 11.4% year on year. This print exceeded analysts’ expectations by 0.8%. Despite the top-line beat, it was still a mixed quarter for the company with a decent beat of analysts’ adjusted operating income estimates but full-year revenue guidance meeting analysts’ expectations.
Bright Horizons Total Revenue
Bright Horizons delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 13.6% since reporting and currently trades at $114.81.
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ:STRA) is a career-focused higher education provider.
Strategic Education reported revenues of $306 million, up 7% year on year, outperforming analysts’ expectations by 1.5%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
Strategic Education Total Revenue
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $96.99.
Founded in 1949, Grand Canyon Education (NASDAQ:LOPE) is an educational services provider known for its operation at Grand Canyon University.
Grand Canyon Education reported revenues of $238.3 million, up 7.4% year on year, falling short of analysts’ expectations by 0.6%. Still, it was a a satisfactory quarter as it posted an impressive beat of analysts’ adjusted operating income estimates.
Grand Canyon Education delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 6.7% since the results and currently trades at $170.89.
Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.
Adtalem reported revenues of $417.4 million, up 13.2% year on year. This print surpassed analysts’ expectations by 5%. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ EPS estimates.
Adtalem achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 30% since reporting and currently trades at $97.45.
Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ:LAUR) is a global network of higher education institutions.
Laureate Education reported revenues of $368.6 million, up 2% year on year. This result topped analysts’ expectations by 1.9%. It was a very strong quarter as it also recorded an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
The stock is up 19.7% since reporting and currently trades at $18.64.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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