Should You Buy Grand Canyon Education Stock After 14% Decline Last Week?

by Trefis Team
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Education services provider Grand Canyon Education’s (NASDAQ:LOPE) stock has declined by -14% over the week (five trading days) compared to the S&P 500 which gained about 1%. The sell-off comes following the company’s Q1 2021 results, which were largely in line with consensus, although guidance for the next quarter was lighter than expected.  So is Grand Canyon Education’s stock likely to fall further or will it rally from current levels? Based on our machine learning model, which analyzes multiple years of historical stock price data, Grand Canyon Education’s stock has a strong chance of a rise over the next month (21 trading days) after declining by about 14% over the last five trading days. See our analysis LOPE Stock Chances Of Rise for more details.

So what’s the longer-term outlook like for the stock? Grand Canyon Education provides colleges and universities with technology services such as learning management systems as well as academic services such as faculty training and development. The company’s business is heavily concentrated with a single customer – the Grand Canyon University, which pays Grand Canyon Education 60% of its tuition and fees received from students. The university accounts for roughly 95% of the company’s partner enrollments and this means that long-term growth will be heavily tied to the performance of Grand Canyon University. However, the company is still growing fairly quickly, with partner enrollments rising 7.2% year-over-year to 115,390 at the end of the quarter, and revenue projected to grow by 9% for 2021 and around 7% for 2022, per consensus estimates. The company’s current valuation is also reasonable, with the stock trading at just 15x consensus 2021 EPS and 14x consensus 2022 EPS. This could make the stock a relatively compelling pick at current levels.

While LOPE stock’s valuation looks reasonable, what if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio to beat the market, with over 150% return since 2016, versus 88% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.

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