Education Is In High-Demand
The pandemic has changed the way we live. We aren’t getting our food or our recreation the ways we used to. Our shopping habits are different. We work more from home when we can. And we are getting our education in different ways. And this is opening up an opportunity for investors that maybe shouldn’t be passed up. Results from across the educational spectrum show increased demand for services and materials that aren’t going to let up soon.
Barnes & Noble Education Inc, Surges After Q3 Earnings
Shares of Barnes & Noble Education (NYSE:BNED) are surging following the release of the fiscal Q2 earnings. The company saw a substantial revenue decline as expected but the net was much greater than expected. The company has proved nimble in this time of change and been able to leverage eChannels and other support-focused revenue streams. On the top line, the revenue of $595.5 million is down 22% from last year but beat the consensus by a full 1300 basis points. More importantly, the company generated positive cash flow and GAAP earnings that suggest it will not only weather the storm but come out in better shape.
“We expect the impacts of COVID-19 to extend into the new year, and as such, we are continuing to manage expenses and liquidity prudently. Our current liquidity position remains strong despite the challenging climate. As students, faculty, and institutions continue to adapt to an educational landscape that is changing each day, we remain well-positioned to provide invaluable services and support to ensure all of our customers have the tools they need for success.”
The price action in BNED looks strong despite resistance at the $4.00 level. This resistance is being tested and may break down in the next few trading days. A move above the $4.00 level would be very bullish and likely lead the stock up to the $4.50 to $5.00 range or 12.5% to 25% upside.
Barnes & Noble Education (NYSE:BNED)
John Wiley & Sons Is A High-Yield Opportunity
John Wiley & Sons (NASDAQ:JW.A) are publishers of educational material and just reported a blowout quarter. The company easily beat the top and bottom-line estimates on strength in research publishing. The company saw a 5% increase in revenues across all segments with a 7% increase in research publishing. The educational resources segment grew a stunning 28% but was offset by weakness in the professional categories. Looking forward, the company is expecting revenue and earnings to continue improving at the end of the fiscal year.
“The pandemic is accelerating important trends underlying our core strategies, including a global increase in the demand to publish and access high-quality research and a decisive shift to online learning and digital curriculums,” says CEO Brian Napack.
Shares of JW.A and JW.B pay about 3.3% in yield with a positive outlook for dividend growth. The company has been increasing the payout for 22 years and has room on the balance sheet for another. Looking at the chart, it appears as if this stock is melting up on good news and may move higher. The stock jumped more than 15% after the FQ2 report and the indicators are strong.
Strategic Education Is Set To Pop
Strategic Education (NASDAQ:STRA) has defied the odds. The pandemic took a toll on revenue but not as you would think for a company that makes its money via classroom attendance. The Q3 results are the weakest of the year and likely the worst this company will face. The $239.1 million reported for the quarter is down about 1% from the previous year and slightly below the consensus but nowhere near as bad as what I’ve seen among restaurants, movie theaters, and entertainment venues.
Bank of America analysts just turned bullish on Strategic Education citing enrollment stability and an outlook for growth. “We acknowledge short-term enrollment (and profit) pressure from the pandemic and stepped up investments, and expect the regulatory backdrop to become more difficult in 2021. However, we see these issues largely priced in following a 49% pullback from July highs … Looking forward, we expect enrollment to stabilize by mid-2021, which should combine with moderating investments … to drive a strong profit recovery in 2022.”
Shares of Strategic Education are lagging the broad market and its education-related peers. Along with the value proposition, the company also pays a safe and growing 2.6% yield.