Shares of Grand Canyon Education (LOPE - Free Report) have been strong performers lately, with the stock up 17.9% over the past month. The stock hit a new 52-week high of $132.72 in the previous session. Grand Canyon Education has gained 33.4% since the start of the year compared to the 15.1% move for the Zacks Consumer Discretionary sector and the 37.1% return for the Zacks Schools industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 6, 2019, Grand Canyon Education reported EPS of $1.09 versus consensus estimate of $0.94.
For the current fiscal year, Grand Canyon Education is expected to post earnings of $5.39 per share on $777.73 million in revenues. This represents a 5.89% change in EPS on a -8.02% change in revenues. For the next fiscal year, the company is expected to earn $5.86 per share on $862.54 million in revenues. This represents a year-over-year change of 8.91% and 10.9%, respectively.
Grand Canyon Education may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Grand Canyon Education has a Value Score of C. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 23.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 21.9X versus its peer group's average of 17.1X. Additionally, the stock has a PEG ratio of 1.59. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Grand Canyon Education currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Grand Canyon Education passes the test. Thus, it seems as though Grand Canyon Education shares could still be poised for more gains ahead.
How Does Grand Canyon Education Stack Up to the Competition?
Shares of Grand Canyon Education have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Lincoln Educational Services (LINC - Free Report) , K12 (LRN - Free Report) , and Weight Watchers International (WW - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Grand Canyon Education. Still, the fundamentals for Grand Canyon Education are promising, and it still has potential despite being at a 52-week high.