Think Childcare Ltd share price rockets 9.5% on report

The Think Childcare Ltd (ASX: TNK) share price grew by 9.45% today after investors saw its report.

Here are the numbers for the full year report, compared to last year:

  • Revenue up 23% to $66.89 million
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) up 23% to $10.45 million
  • Net profit after tax (NPAT) up 11% to $5.9 million
  • Earnings per share (EPS) up 7% to 14.08 cents
  • Dividend up 11.1% to 10 cents per share

Think Childcare increased the number of centres from 38 to 43 during the year, an impressive rise of 13% for the year. It also increased the number of licensed places from 3,147 to 3,588.

The average fees per day rose from $103 to $110 whilst the wages to turnover ratio improved from 49.55% to 48.21%.

Management commented on the state of the sector by saying that during the last four years the sector has experienced significant opportunistic investor activity fuelled by cheap money, willing lenders and purchases at inflated multiples from domestic and overseas buyers. The market conditions now reflect a tightening of credit and more considered acquisitions.

The company believes that the sector is now returning to more sustainable numbers.

The concerning thing for me is that nearly of its debt metrics more than doubled. Expansion is good and sometimes debt is better than capital raisings, but it could be dangerous in a rising interest environment.


Think Childcare has factored into its 2018 forecast that it will be ‘buffeted by some moderate head winds’ in the first half until the new childcare package commences in July. The company said that supply remains an issue, so parents are choosing quality, which is why the company is focusing on being the best in the market.

That’s why the childcare operator is going to invest $4.5 million in capital expenditure during 2018.

Foolish takeaway

In 2018 management have projected that revenue could grow by 32% and earnings per share could grow by 34%. This would be an excellent result if it can achieve it, considering management mention that it will suffer ‘moderate headwinds’ in the months ahead.

If the company achieves this then it’s only trading at 12x FY18’s estimated earnings, which seems like a reasonable price to pay with a grossed-up dividend yield of 6.49%.

Think Childcare could be a decent growth option, but these top stocks could be even better.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.