3 education stocks for a changing learning environment
As in virtually every industry, the novel coronavirus has had a crippling impact on education stocks. The school year has been cut short due to the pandemic and classes have been moved online.
Online education has been a disruptive force in the industry for some time, but is now more apparent than ever. Therefore, smart investors have invested heavily in education stocks this year and will continue to do so for the foreseeable period.
The event was a transformation for digital education. While there are some variables that need to be sorted out, it is clear that online education is here to stay. The closure of distance learning institutes and techniques will bring about a structural change in the industry.
Before the crisis hit, the online education system grew dramatically and was worth $ 18.66 billion last year. It was previously planned to achieve 350 billion dollars by 2025, but the pandemic has significantly accelerated growth.
Here are three educational stocks to buy today:
- Chegg (NASDAQ:CHGG)
- New oriental education (NYSE:EDU)
- K12 Inc (NYSE:LRN)
Educational stocks to buy: Chegg (CHGG)
Chegg is an online educational service that provides educational support services to college and university students. Its services include tutor support, textbook solutions, math solver, internships and other unique services.
With the lockdown restrictions in place, the company benefited from the shutdown of the education system. As a result, Chegg stock has grown exponentially of over 132%.
The company recently released its excellent third quarter results, where the number of subscribers increased by 69% in one year to 3.7 million. Revenue was $ 154 million, which represents an increase of 64% year-on-year. Service revenues, in particular, increased by 72% year-on-year. Unfortunately for the company, its net loss was $ 37.1 million compared to a net loss of $ 11.5 million during the same period last year.
The company’s annual outlook is $ 626-628 million, with gross margins of 68-69%. Revenue could exceed $ 800 million by 2021 and its EPS could be $ 1.75 per share.
New Eastern Education (EDU)
New Oriental Education is a Chinese provider of private education services. In particular, it offers language training, preparatory courses, assessment tests, admission training, as well as primary and secondary education.
The company has benefited significantly from favorable winds in the education sector boosted by the pandemic. As a result, the six-month EDU share returns are 47.5%.
In its last quarter, revenues were above estimates, 8% drop while analysts expected a drop of 11 to 15%. Likewise, margins fell 6.1% year over year due to lower revenues. However, its non-GAAP net profit fell 19.8%, which is an improvement from the 49% drop recorded in the previous quarter.
Despite the setbacks in its final quarter, the company’s outlook for the coming year looks impressive. It will accelerate the development of its online, emerging and offline (OMO) segments.
In addition, it is investing heavily in its K12 tutoring segment, expecting a healthy increase in student numbers. He is also focused on expanding his online presence under Koolearn; Koolearn is increasing its platform and courses by taking advantage of online change.
K12 inc. (LRN)
K12 Inc., a digital education company, offering online curriculum, software and educational services to students. Before the pandemic, many viewed it as an ordinary investment, but it has increased dramatically during the pandemic. As a result, the six-month return on the K12 share is an impressive 25%.
The third quarter has been an exceptional year for the company, with revenue increasing 44.3% year-over-year. Its general and vocational education segments grew 34.4% and 142.5%, respectively, with double-digit increases in enrollment. Earnings per share was 30 cents compared to a loss of 25 cents last year. Covid-19 will continue to drive growth and push the number of registrations even higher.
At At the time of publication, Muslim Farooque had (directly or indirectly) no position on the titles mentioned in this article.