Idp Education Ltd (ASX: IEL) shares jumped 2% today despite an ASX announcement showing a director has been selling.
What does IDP do?
IDP is an education organisation that operates internationally, offering student placements in Australia, New Zealand, the US, UK, Ireland and Canada.
Their services involve assistance for students to choose and find courses, find suitable health cover and complete visa applications. IDP has more than 100 offices in 31 countries and 550 counsellors.
The International English Language Testing System, or IELTS, is an international standardised test of English language proficiency for non-native English language speakers. IDP is the co-owner of IELTS. More than 3 million IELTS tests were undertaken around the world in 2018.
Basically, over 10,000 organisations rely on IELTS, including governments for migration assessment, universities for admissions and employers and professional registration bodies.
IELTS Australia Pty Ltd manages a network of more than 200 IELTS test centres in over 35 countries. There are over 1,000 IELTS test centres globally.
The IDP Education business started 50 years ago and, they listed on the ASX in 2015
Prior to today’s announcement, IDP’s non-executive director, Gregory West held 50,000 shares. According to the announcement, he has sold down half his shareholding in the company, or 25,000 shares, for $445,485.
This follows the sale of 24,617 shares for $376,553 in May. Combined, those sales are over $800,000 and certainly not chump change.
Buy, Hold or Sell
There’s a lot to like about the IDP business. A growing market has provided good profit growth for the company. Revenue increased by 26% in 1H19 and its return on equity was above 50%. This growth has been achieved while avoiding large amounts of debt.
However, with consensus earnings per share of 33.8 cents for 2020 and a current share price of $18.76, the shares trade on a lofty forward price-earnings ratio (P/E) of 55 times. While a P/E shouldn’t be used in isolation to assess the value of a company, it can give an early indication of the price you are paying.
Having previously owned shares in IDP, they remain on my watchlist as a company I would like to own at the right price.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of writing David does not have a financial interest in any of the companies mentioned.