Product and Service
Companies included in performance improvement consulting sector in education industry primarily provide training and consulting services to improve individual and organizational performance.
Demand for Product and Service
As our sales data indicates, growth in demand in US market for Training and consulting services of performance improvement has been decreasing in the past several years. Demand from emerging market seems to have been growing.
The Sector
Sector’s current, trend, causes behind trend, and future
Current and Trend
- Growth in demand in in US market for training and consulting services of performance improvement has been decreasing in the past several years as indicated by decreasing sales of companies in that market.
- Demand from emerging market seems to have been growing as indicated by the growth in sales of companies in China.
- The decreasing demand puts huge pressure on sales of companies and thus damages their profitability.
Causes behind the trend
- Since most of demand in this sector comes from business area the poor performance of those companies in terms of their sales should have been determined by the macro-economy factors and as well partially by government budgets.
Industry Future
There is a reason to believe that the downward trend will continue until companies would like to spend more on their employees’ training to improve their performance. There should be more business opportunities in emerging markets since corporate operating and management are becoming more mature in those markets as a result of globalization in the past several years.
Numbers
General Financial Performance of Companies In the Sector
From the sales of companies in this sector, it seems that the demand for training and performance improvement consulting services from customers of US market is not strong. Companies in this sector continued to expand their services to international market, which seems to be growing quickly.
Due to tightened demand and thus pressured sales, companies have usually faced issues of shrinking gross margins and increasing SG&A as percentage of sales. As a result, companies’ operating margins all decreased to some extent. The typical operating margins among those companies are between -1.5% and 4% down from 8-12% three years ago.
According to our analysis, the typical companies’ enterprise price/EBI ratio is 34 with an interest/EBITDA ratio of 22%. The typical companies’ enterprise/sales ratios are 0.8-1.9.
