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IDP Education share price rockets 18% higher on stellar half year result

In early trade the IDP Education Ltd (ASX: IEL) share price has stormed higher following the release of its half year results.

At the time of writing the education services provider’s shares are up a massive 18% to $13.50.

Here is how IDP Education performed during the six months to December 31 compared to the prior corresponding period:

  • Total revenue increased 26% to $304.3 million.
  • IELTS tests up 18% to 660,000.
  • Student placement volumes increased 23% to 27,300.
  • EBITDA grew 33% to $66.8 million
  • Net profit after tax lifted 34% to $40.7 million.
  • Interim dividend up 41% to 12 cents per share.

Overall, I thought this was another strong result from IDP Education and I can’t say I’m surprised to see its shares rally higher today.

The key drivers of the company’s growth in the first half were its English Language Testing and Student Placement segments.

English Language Testing revenue increased 19% during the half to $178.6 million. This was the result of an 18% increase in volumes and a 2% lift in the average test fee to $271,

Student Placement revenue grew strongly during the period. It was up 36% on the prior corresponding period to $90.7 million thanks to a 23% lift in volumes and a 14% increase in the average application processing fee (APF) to $3,341.

Asia was once again the main generator of revenue. Revenues from the region increased 33% on the prior corresponding period to $204.4 million. This offset weakness in the Australasian market which saw revenues fall 11% to $31 million. There was also solid growth in the Rest of the World region, with revenue increasing 30% to $68.9 million. This was driven by strong performances in the Middle East, UK, and Canada.

Another highlight was the early success of its digital business. There are now 24 markets live on its new global platform, with web traffic growing strongly.

Should you invest?

I think this strong first half result demonstrated why IDP Education is one of the best and under-appreciated growth shares on the local market.

However, with its shares now changing hands at 50x estimated full year earnings after today’s strong share price gain, I think they are about fair value.

In light of this, I would hold off from buying shares right now and wait for an opportunity to buy in at a cheaper price.

In the meantime, fellow growth shares Aristocrat Leisure Limited (ASX: ALL) and Bravura Solutions Ltd (ASX: BVS) could be worth considering at current levels.

Alternatively, here are three buy-rated growth shares to consider in February.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Bravura Solutions Ltd. 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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