Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Why IDP Education (ASX:IEL) Shares Are Being Thumped

IDP Education Ltd (ASX: IEL) shares were down almost 20% following the release of their full-year result but have recovered somewhat.

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. This involves 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 counselors.

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.

Ouch… Was The Result Really That Bad?

With the IDP share price down heavily one would expect the result wasn’t so good. On the contrary, IDP reported a record financial performance with these impressive numbers:

  • 23% growth in revenue of $598 million
  • 29% growth in EBITDA to $115 million
  • 29% growth in profit to $66.6 million
  • A final dividend of 7.5 cents per share
  • Cash balance of $56 million, but net debt of $4 million

These are strong numbers and even if you strip away the benefit they received from the currency, they recorded 20% revenue growth and 23% profit growth. Cost control saw the EBITDA margin rise from 18% to 20%. Total global english language test volumes were 3.8 million, up 11% on last year.

Simply put, the market expected more…

The profit result was below analyst expectations and the shares were already trading on a hefty multiple. So despite the strong numbers from IDP, the market wanted more. Even if you take into account today’s drop in the share price, IDP shares trade on a trailing price-earnings multiple of 60 times.

Are IDP Education Shares A BUY?

The number of IELTS tests has grown at 11% per annum for the past 10 years and I believe this growth should continue. With strong growth, a good balance sheet and a management team that are delivering, I think IDP is a high-quality business and one that I would like to own (again) at the right price. For me, the ideal buying price is a little lower than where it currently is and for now, I will be keeping a close eye on it.

[ls_content_block id=”18457″ para=”no-shortcodes”]

Disclosure: At the time of writing David does not have a financial interest in any of the companies mentioned.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content