Here’s why the Navitas Limited share price soared higher today

Shares in leading university pathways education provider Navitas Limited (ASX: NVT) are approximately 7% higher in late morning trade on Tuesday at $4.92, after investors reacted positively to the release of the company’s interim results.

The rise bucks the trend of the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) which is down around 0.4%.

Here’s what has excited investors today:

  • Group revenue grew 8% to $517.5 million
  • Underlying net profit after tax increased 12% to $45.1 million
  • Underlying earnings per share also increased 12% to 12 cents per share (cps)
  • A fully franked dividend of 9.6 cps was declared by the board of directors which represents a 2% increase on the prior corresponding period. The stock will trade ex-dividend on Friday, February 26, with payment scheduled for Tuesday, March 15
  • Amongst the operational highlights during the six-month period was the contract renewal with the University of South Australia for a 10-year period within the University Programs division. A solid improvement in earnings within the Professional and English Programs division thanks to improved margins and robust results within the SAE division thanks to an improved performance in the USA.
  • Looking forward, Navitas’ founder and CEO Rod Jones noted that “Navitas has made a strong start to the year. As expected, the second half will be impacted by the completion of the Macquarie University contracts in February 2016 and as such the Group reaffirms guidance that FY16 EBITDA is anticipated to remain broadly in line with FY15.”

Limited investment options

The business of education is an intuitively appealing industry given the growth potential particularly from overseas students looking to study in Australia. While a shadow has recently been cast over most listed vocational education stocks – which significantly limits the depth of investment opportunities – there are still at least two other quality companies worth considering.

  1. Idp Education Pty Ltd (ASX: IEL) provides international student placements services and was recently spun-out of SEEK Limited (ASX: SEK).
  2. 3P Learning Ltd (ASX: 3PL) has carved out an enviable lead in the provision of online educational programs.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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