Bipartisan Policies And Diverse Programs Will Unlock Future Potential

Key Takeaways

• Expansion into high-demand education sectors and new program offerings will enhance revenue mix and support sustained margin growth.
  
• Structural cost reductions and industry tailwinds position the company for stronger earnings, improved operating leverage, and student acquisition opportunities.
  
• Exposure to volatile student demand, policy risks, operational inflexibility, and growing competition threatens revenue stability and profitability unless the company adapts and innovates effectively.

Catalysts

Provides educational services in Australia, Europe, and South America.

• The announced increase in Australia's student National Planning Level to 295,000 in 2026, supported by bipartisan government backing, sets the stage for stronger international enrollment growth and provides greater revenue visibility as sector headwinds ease.
  
• Robust market share gains in vocational training (VET) and expansion into high-growth sectors like health care and hospitality position the company to capture persistent and rising demand for career-oriented education, supporting long-term revenue and EBITDA growth.
  
• Diversification into higher-margin offerings-including the launch of new higher education and early childhood programs within the Greenwich brand, as well as increased emphasis on B2B, skills-based, and micro-credential courses-will improve overall revenue mix and lead to margin expansion over time.
  
• Structural cost reductions, including campus rationalization, permanent operating expense cuts, and efficiencies from shared services, will enable improved operating leverage and drive higher net margins and sustainable increases in earnings as revenue recovers.
  
• Ongoing industry consolidation and policy/funding tailwinds are expected to favor compliant, well-capitalized providers like NextEd Group, enabling additional student acquisition opportunities and creating potential for further accretive M&A, benefiting future revenue and profit growth.

NextEd Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming NextEd Group's revenue will grow by 7.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from -15.2% today to 0.6% in 3 years time.
• Analysts expect earnings to reach A$700.0 thousand (and earnings per share of A$0.0) by about September 2028, up from A$-14.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 131.4x on those 2028 earnings, up from -3.7x today. This future PE is greater than the current PE for the AU Consumer Services industry at 15.4x.
• Analysts expect the number of shares outstanding to grow by 0.45% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.94%, as per the Simply Wall St company report.

NextEd Group Future Earnings Per Share Growth

Risks

• The 13.9% year-on-year revenue decline-driven by lower international English enrollments and softer demand for technology and design courses-underscores exposure to student mobility and changing education demand, which could impede long-term revenue growth if international enrollments do not recover as expected.
  
• Persistently challenging conditions in the Technology & Design segment, exacerbated by rapid changes from AI and shifting course demand, highlight execution risks in course realignment and may suppress future revenue and net margins if NextEd cannot adapt quickly or reestablish differentiation.
  
• Heavy reliance on improvements in cost structure and consolidation to offset revenue declines, alongside structural lease obligations with limited subleasing success, increases risk of prolonged fixed costs; failure to further reduce lease burden would constrain future EBIT and cash flows.
  
• Dependence on government policy stability and international student flows means that adverse changes in immigration settings, regulatory mandates, or global education trends could create renewed volatility in volumes and revenue streams, especially if bipartisan support or sector priorities shift.
  
• Growing market competition-both from consolidating education providers and from proliferation of free/low-cost online education platforms-may erode pricing power and compress net profit margins, particularly if NextEd fails to continuously innovate or maintain premium positioning.

Valuation

• The analysts have a consensus price target of A$0.325 for NextEd Group based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$118.3 million, earnings will come to A$700.0 thousand, and it would be trading on a PE ratio of 131.4x, assuming you use a discount rate of 7.9%.
  
• Given the current share price of A$0.24, the analyst price target of A$0.32 is 26.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.