November 2, 2012
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 for-profit educator Grand Canyon Education (Nasdaq: LOPE ) soared 13% today after its quarterly results and outlook easily topped Wall Street expectations.
So what: For-profit educators have struggled amid new regulations and increased government scrutiny, but Grand Canyon's impressive third-quarter-- earnings spiked 44% on revenue growth of 17% -- coupled with upbeat guidance for the fourth helps ease some of those long-standing concerns. In fact, Grand Canyon's enrollment surged 17.5% to 52,300 versus 44,500 in the year-ago period, giving investors plenty of good vibes over a sustained industry turnaround.
Now what: Don't expect the operating tailwinds to slow anytime soon. Management now sees fourth-quarter EPS of $0.41 to $0.42 on revenue of $135 million to $136 million, nicely ahead of Wall Street's view of $0.38 and $129.5 million, respectively. Of course, when you couple the uncertainty that continues to surround the sector with Grand Canyon's 52-week high-hitting, 20 P/E-sporting stock price, buying into the momentum seems particularly risky at this point.
Interested in more info on Grand Canyon? Add it to your watchlist.
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