Grand Canyon Education LOPE – Phenomenal Growth Potential with Regulatory Risk

Video Summary

About the company

Grand Canyon Education is a regionally accredited for-profit education company that provides online postsecondary education as its primary service. It offers graduate and undergraduate degree programs in education, business, and healthcare.

History

Grand Canyon College was founded in 1949 as a traditional, not-for-profit college. In 1968, it became regionally accredited. In 1989, it changed its name to Grand Canyon University. In January 2004, it was taken private because it was struggling financially.

Performance

Revenues increased from $26 million in 2004 to $262 million in 2009. Net income increased from negative $16 million in 2004 to $27 million in 2009.

Industry

It is evident that the market for postsecondary education is strong. Online education is the fastest growing segment in the education market. Traditional colleges and universities are not able to meet this growing demand.

Risks

The entire for-profit education industry is not popular with investors because of regulatory concerns. Any regulatory changes are risky because for-profit education companies rely on Title IV loans to generate revenues. Any changes in Title IV programs could be detrimental to the entire industry.

Conclusion

This company has phenomenal growth potential and operates in an industry that offers a product that is in high demand; however, because the majority of its revenues are derived from Title IV loans, it has a significant amount of risk.

Disclosure: The Author does not own LOPE.

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