Why the G8 Education Ltd share price is up today 

G8 Education Ltd’s (ASX: GEM) presentation at the Macquarie Conference highlighted that the government’s new funding package of childcare will positively impact 2H18 earnings. Vacancies are also down so far in 2018. 

According to the Department of Education and Training, the changes to the childcare funding package from July 2018 will cut childcare costs, especially decreasing out-of-pocket expenses for families’ earning less than $120,00 per annum.

Lower childcare costs support increased female participation in the workforce, which in turn will lead to higher childcare demand. 

G8 Education is the largest for-profit provider of childcare and early educatior in Australia, but the market remains fragmented with the top five players holding only 25% of the childcare market. 

The one-year performance of the share price is -37% with a rally of 7% at the time of writing to $2.75. G8 Education is trading on a forward price-earnings-ratio of 11.2x and the current annual dividend yield is 10% when grossed up for franking. 

Navitas Limited (ASX: NVT) and Idp Education Ltd  (ASX: IEL), are also education providers that may be of interest. 

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Motley Fool contributor Rosemary Steinfort 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 Scott Phillips.

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