Is IDP Education Ltd (IEL) cheap?

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

Ask a question

The Latest Q&A

Question asked 01/03/2024

Is IDP Education Ltd (IEL) cheap?

Dear James, Shawn, and the MM team, IEL (IDP Education) Share Price has fallen from $23.33 when it first announced 1H FY24 Results on (14/2) to $18.91 as of today (29/2) - a drop of 19%, despite a solid result with Rev up 15%, & EBIT up 25%. This is mainly due to migration policies and competitive landscape. I feel this is overdone. It’s felt these factors have already been priced in before the result announcement. The strong 1H results showed positives that will continue to drive long-term growth, such as fee increases, Student Placement market share gains. Thanks again for taking this question.

Answer

Hi Peter,

As you say the English testing & student placement group delivered solid earnings in February. Student placement growth of 33% was far above the industry whilst the company was also putting through 7% price increases on average – we covered the result here.

While the subsequent price drop does feels a bit overdone we believe migration policies could tighten further, e.g. the number of “overseas students” rolling courses every 3-4 months to remain in Australia will at some point be stamped out. Hence we can only remain neutral/mildly bullish even following the recent weakness. It’s still on 28x with some earnings uncertainty, so we would not call it ‘cheap’ per se.

chart

IDP Education Ltd (IEL)

LAST UPDATED 01/03/2024 11:57

Latest Reports

Weekend report 27/04/2024

Weekend Q&A: Strong inflation crushes hopes of a rate cut in 2024

Afternoon report 26/04/2024

The Match Out: ASX (nearly) gives up week’s gain in tough Friday session

The local market dropped ~100 points on the open, failing to see any reprieve following two weaker sessions out in the US since our close on Wednesday. After dropping back below 7600 the index traded in a reasonably tight 30-point range for the rest of the session, failing to join in on the rally across the region and what’s showing on the US Futures ahead of their Friday session. BHP managed to take 31pts off the market alone today, weakness coming after they lobbed an all scrip bid for Anglo American (AAL LN). Despite the soggy end to the week, the ASX200 finished marginally higher, +8pts / +0.11%.