ASX:GEM

Stock Analysis Report

Executive Summary

G8 Education Limited owns, operates, franchises, and manages child care centers.


Snowflake Analysis

Very undervalued second-rate dividend payer.


Similar Companies

Share Price & News

How has G8 Education's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: GEM has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.3%

GEM

3.8%

AU Consumer Services

-2.2%

AU Market


1 Year Return

-45.0%

GEM

14.6%

AU Consumer Services

11.6%

AU Market

Return vs Industry: GEM underperformed the Australian Consumer Services industry which returned 16.7% over the past year.

Return vs Market: GEM underperformed the Australian Market which returned 14.6% over the past year.


Shareholder returns

GEMIndustryMarket
7 Day0.3%3.8%-2.2%
30 Day-8.8%9.8%-2.2%
90 Day-11.1%16.7%2.2%
1 Year-42.5%-45.0%17.7%14.6%16.5%11.6%
3 Year-47.1%-54.4%41.4%27.6%36.2%18.1%
5 Year-43.1%-57.3%-30.1%-42.1%46.7%14.1%

Price Volatility Vs. Market

How volatile is G8 Education's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is G8 Education undervalued compared to its fair value and its price relative to the market?

41.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: GEM (A$1.73) is trading below our estimate of fair value (A$3.14)

Significantly Below Fair Value: GEM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: GEM is good value based on its PE Ratio (12.7x) compared to the Consumer Services industry average (20.5x).

PE vs Market: GEM is good value based on its PE Ratio (12.7x) compared to the Australian market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: GEM is good value based on its PEG Ratio (0.7x)


Price to Book Ratio

PB vs Industry: GEM is good value based on its PB Ratio (0.9x) compared to the AU Consumer Services industry average (1.8x).


Next Steps

Future Growth

How is G8 Education forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

13.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GEM's forecast earnings growth (17.3% per year) is above the savings rate (1.1%).

Earnings vs Market: GEM's earnings (17.3% per year) are forecast to grow faster than the Australian market (9.3% per year).

High Growth Earnings: GEM's earnings are forecast to grow, but not significantly.

Revenue vs Market: GEM's revenue (3.7% per year) is forecast to grow slower than the Australian market (4.2% per year).

High Growth Revenue: GEM's revenue (3.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GEM's Return on Equity is forecast to be low in 3 years time (9%).


Next Steps

Past Performance

How has G8 Education performed over the past 5 years?

-0.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GEM has high quality earnings.

Growing Profit Margin: GEM's current net profit margins (6.8%) are lower than last year (8.4%).


Past Earnings Growth Analysis

Earnings Trend: GEM's earnings have declined by -0.8% per year over the past 5 years.

Accelerating Growth: GEM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: GEM had negative earnings growth (-12.9%) over the past year, making it difficult to compare to the Consumer Services industry average (0.6%).


Return on Equity

High ROE: GEM's Return on Equity (7.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is G8 Education's financial position?


Financial Position Analysis

Short Term Liabilities: GEM's short term assets (A$83.7M) do not cover its short term liabilities (A$164.7M).

Long Term Liabilities: GEM's short term assets (A$83.7M) do not cover its long term liabilities (A$1.0B).


Debt to Equity History and Analysis

Debt Level: GEM's debt to equity ratio (46.2%) is considered high.

Reducing Debt: GEM's debt to equity ratio has increased from 39.5% to 46.2% over the past 5 years.

Debt Coverage: GEM's debt is well covered by operating cash flow (39.7%).

Interest Coverage: GEM's interest payments on its debt are not well covered by EBIT (2.2x coverage).


Balance Sheet

Inventory Level: GEM has a high level of physical assets or inventory.

Debt Coverage by Assets: GEM's debt is not covered by short term assets (assets are 0.2x debt).


Next Steps

Dividend

What is G8 Education's current dividend yield, its reliability and sustainability?

6.13%

Current Dividend Yield


Dividend Yield vs Market

company6.1%marketbottom25%2.4%markettop25%5.5%industryaverage2.1%forecastin3Years7.5%

Current dividend yield vs market & industry

Notable Dividend: GEM's dividend (7.37%) is higher than the bottom 25% of dividend payers in the Australian market (2.29%).

High Dividend: GEM's dividend (7.37%) is in the top 25% of dividend payers in the Australian market (5.39%)


Stability and Growth of Payments

Stable Dividend: GEM has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: GEM's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (93.3%), GEM's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: GEM's dividends in 3 years are forecast to be covered by earnings (76.2% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.5yrs

Average management tenure


CEO

Gary Carroll 0

3.1yrs

Tenure

AU$762,371

Compensation

Mr. Gary G. Carroll, B.Comm (Hons), B.Law (Hons), CPA, has been Chief Executive Officer, Managing Director and Executive Director of G8 Education Limited since January 1, 2017. Mr. Carroll is responsible f ...


CEO Compensation Analysis

Compensation vs Market: Gary's total compensation ($USD505.85K) is about average for companies of similar size in the Australian market ($USD694.17K).

Compensation vs Earnings: Gary's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Gary Carroll
CEO, MD & Executive Director3.1yrsAU$762.37k0.026% A$207.6k
Sharyn Williams
Chief Financial Officer3yrsAU$438.84k0.0054% A$43.2k
Jason Ball
General Manager of Operations2.7yrsAU$447.02kno data
Peter Nelson
Chief Information Officer0yrsno datano data
Tracey Wood
General Counsel & Company Secretary1.8yrsno datano data
Jenni Marsh
General Manager of Safety1.6yrsno datano data
Greg Bowell
General Manager of Marketing2.3yrsno datano data
Jessica Battersby
General Manager of Human Resources0yrsno datano data

2.5yrs

Average Tenure

Experienced Management: GEM's management team is considered experienced (2.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Gary Carroll
CEO, MD & Executive Director3.1yrsAU$762.37k0.026% A$207.6k
David Foster
Independent Non Executive Director4yrsAU$165.00k0.0050% A$39.7k
Brian Bailison
Independent Non-Executive Director9.9yrsAU$165.00k0.0054% A$43.2k
Susan Forrester
Independent Non-Executive Director8.3yrsAU$165.00k0.011% A$89.9k
Mark Johnson
Non-Executive Chairman4.1yrsAU$284.98k0.016% A$129.8k
Margaret Zabel
Independent Non-Executive Director2.4yrsAU$140.00k0.0063% A$50.2k
Julie Cogin
Independent Non-Executive Director2.4yrsAU$140.00k0.0041% A$32.9k

4.0yrs

Average Tenure

50.5yo

Average Age

Experienced Board: GEM's board of directors are considered experienced (4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

G8 Education Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: G8 Education Limited
  • Ticker: GEM
  • Exchange: ASX
  • Founded: 2006
  • Industry: Education Services
  • Sector: Consumer Services
  • Market Cap: AU$796.106m
  • Shares outstanding: 460.18m
  • Website: https://www.g8education.edu.au

Number of Employees


Location

  • G8 Education Limited
  • 159 Varsity Parade
  • Varsity Lakes
  • Queensland
  • 4227
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
GEMASX (Australian Securities Exchange)YesOrdinary SharesAUAUDMar 2010
GEMCHIA (Chi-X Australia)YesOrdinary SharesAUAUDMar 2010
3EAGDB (Deutsche Boerse AG)YesOrdinary SharesDEEURMar 2010

Biography

G8 Education Limited owns, operates, franchises, and manages child care centers. The company provides educational child care services. It operates 492 centers in Australia and Singapore. The company was founded in 2006 and is headquartered in Varsity Lakes, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/25 10:37
End of Day Share Price2020/02/25 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.