A year ago, Navitas Limited (ASX: NVT) was trading at over $7, but in the last 12 months its price has slid by around 40% and it's now trading around $4.50.
Navitas is an education services provider offering a range of educational and training services for students and professionals in partner universities across Australia and around the world.
Navitas' core business model is very attractive. It receives fees from students well in advance of delivering services, which gives it a large cash float to fund operations and investments.
The loss of Macquarie University in July 2014 caused the most significant drop in Navitas' price. This seems to be a severe over-reaction by the market given that the likely impact on Navitas' bottom line appeared fairly small.
The price took another hit in January when the first-half 2015 results spooked the market with some impairment charges and warnings about flat earnings growth "in the university programs moving forward". Once again the reaction was likely stronger than the numbers warranted. The underlying business model was unaffected and it still looks like a solid company on any metrics.
The sector continues to offer substantial growth and Navitas will also benefit from the lower Australian dollar in its international operations. U.S. and Canadian growth in student numbers has been strong and while growth was a bit flat in the U.K., it was still positive.
Navitas pays a healthy dividend, over 5% at current prices. While Navitas has a P/E ratio of about 17.5 currently, that is not particularly high given its record of consistent earnings growth, which looks to continue in the near term.
Navitas could represent an opportunity to buy into a company that has been oversold on the back of consecutive reports that the market interpreted as being "bad news", and therefore has real potential for growth in the share price.
That is the sort of opportunity Foolish investors should be looking for. Far too many investors get seduced by rapidly rising prices and buy into companies from a "fear of missing out", when the future growth is already factored into the price by the market.
The company's share price has suffered over the past 12 months, but it looks to be oversold given that none of the news released has had a material effect on the underlying business. The share price could rebound strongly if the results continue to demonstrate a healthy business with strong growth as expected.
