Education technology (ed-tech) encompasses remote learning, schooling, training, and certification. The pandemic helped change the landscape and attitudes towards edtech as students were forced to use remote classrooms. It made remote work and remote learning commonplace.
As the pandemic receded, the surge in edtech continued to flourish as more diverse educational programs came online and virtual schooling became commonplace. Here are two tech stocks in the consumer discretionary sector to keep on your radar.
Stride Inc.
Stride Inc. (NYSE: LRN) provides online and blended-learning programs primarily for grades K-12 in the United States and abroad. The curriculums cover math, science, English and history for students. Stride also carries adult skills training and certification programs for healthcare, software engineering and medical fields.
Their Galvanize brand offers a project-based curriculum in software engineering, Python fundamentals, and data science. They provide corporate digital training and upskilling. Their Tech Elevator brand helps companies streamline their hiring process by providing access to vetted professionals with the option to reskill the workforce.
Strong momentum
Stride reported its fiscal second-quarter 2024 EPS of $1.54, beating analyst estimates by 23 cents. Net income rose to $66.8 million compared to $50.7 million in the year-ago period. Revenues grew 10.1% YoY to $504.87 million, beating consensus analyst estimates of $498.05 million. Strong enrollment trends helped drive revenues.
General education revenues climbed to $313.9 million, up from $274.7 million in the year-ago period. Total career learning revenues rose to $190.97 million, up from $183.62 million in the year-ago period. The company closed the quarter with $354.4 million in cash and cash equivalents. Stride ended the quarter with 196,500 enrollments at a record to surpass pandemic highs.
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Raising the bar
Stride raised its fiscal Q3 2024 revenue guidance to $500 million to $520 million versus $499.98 million consensus analyst estimates. Adjusted fiscal Q3 2024 operating income is expected to be between $80 million and $85 million, and capital expenditures (cap ex) are expected to be between 14% and 17%. Adjusted operating income is expected to be between $85 million and $95 million.
Stride provided in-line guidance for the fiscal full-year 2024 revenues of $1.99 million to $2.04 billion versus $2 billion consensus analyst estimates. Cap ex is expected to range between $60 million to $65 million. Adjusted operating income is expected in the range of $265 million to $285 million.
Stride CEO James Rhyu commented, “Gross margins are on pace to expand 300 basis points plus or minus. Trailing 12-month reported EPS and reported operating incomes are both up 3 times the level before I am appointed CEO. We’ve got the right team in place and are executing against the strategy that we previously outlined.”
Stride analyst ratings and price targets are at MarketBeat. Stride’s peer and competitor stocks can be found with the MarketBeat stock screener.
Daily bull flag headfake
The candlestick chart on LRN illustrates a potential bull flag breakout attempt. The bull flag started on the pullbacks after peaking at $62.56 on Dec. 15, 2023. A series of lower highs and higher lows retested the daily 50-period moving average (MA), which is now at $59.60.
The breakout attempted triggered on the daily market structure low (MSL) trigger on $58.55 on its Q3 earnings report, which caused a gap up to $69.70 or the daily bull flag breakout. However, a gap and crap ensued as shares fell back down to retest the daily MSL trigger, and shares fell back under the bull flag’s upper descending trend line.
The daily relative strength index (RSI) coiled back up from the 40-band to peak just under the 70-band as it attempts to wind up again. Pullback support levels are at $58.55, $54.74, $50.29 and $48.44.
Adtalem Global Education Inc.
Adtalem Global Education Inc. (NYSE: ATGE) primarily provides healthcare and medical education, training, and certification. It provides 27 campuses with robust online capabilities for over 81,000 students and 150 degree programs. It was originally known as DeVry Education Group until its name change in 2017. Over 90% of its student enrollment is healthcare-focused. Adtalem helps provide workforce talent to the U.S. healthcare industry.
Chamberlain, Walden and MedVet segments
The Chamberlain segment includes Chamberlain University, which offers degree and non-degree programs in nursing and health professions. Walden provides bachelor’s, master’s, and doctoral degrees in nursing and education, business psychology, public health, and social work. Walden has over 100 online degrees and certification programs and has graduated over 174,000 students.
The Medical and Veterinary (MedVet) segment provides degree and non-degree programs in medical and veterinary postsecondary education with three schools, including the American University of the Caribbean School of Medicine located in the U.K. and Saint Maarten graduated over 7,500 students, Ross University School of Veterinary Medicare and Ross University School of Medicine graduated over 15,000 students.
Growing education
Adtalem Global reported its fiscal Q1 2024 adjusted EPS of 93 cents, beating analyst estimates by 13 cents. Revenues rose 4% YoY to $368.85 million. Total student enrollment rose 1.9% to 81,073. Chamberlain University experienced its third consecutive quarter of total enrollment growth, up 5.2% YoY. Walden University’s total enrollment returned to growth, up 0.5% YoY. The company bought back $92 million of shares against a $300 million share buyback program.
Raised guidance
Adtalem provided fiscal full-year 2024 revenue guidance of $1.47 billion to $1.53 billion. Adjusted EPS guidance was raised to $4.25 to $4.45 range. Get AI-powered insights on MarketBeat.
Adtalem Global analyst ratings and price targets are at MarketBeat
Daily bull flag breakout
The daily candlestick chart on ATGE indicates a bull flag breakout that triggered the breakthrough and bounced off the daily 50-period MA support, now at $58.85. The surge peaked shares at $62.99 on Jan. 23, 2024. Share has been in a pullback in another parallel channel comprised of lower highs and higher lows, which could possibly trigger a stairstep bull flag breakout. Pullback support levels are at $56.17, $51.98, $48.75 and $46.70.
