Product and Service
Companies included in career –oriented educational services sector in education industry primarily provide career-oriented educational services including medical& healthcare, accounting, and technology and business.
Demand for Product and Service
As our sales data indicates, demand for medical education and professional training in US market is solid. But demand for postsecondary education has been weak.
The Sector
Sector’s current, trend, causes behind trend, and future
Current and Trend
- The demand for career-oriented education service such as medical& healthcare and accounting, while has not been growing fast, seems strong as indicated by the flat growth in revenue.
- It seems that demand for regular post secondary education excluding medical and accounting has decreased significantly in the past two-three years as indicated by decreased enrollments.
Causes behind the trend
- Demographic changes and economy and thus the market’s demand for skills professionals determine the fundamental trend for career-oriented education service industry.
The growth of enrollment and revenue that companies present in this sector seems to be consistent with strong market’s demand for professionals and skilled worker in fields such as medical and healthcare and accounting.
Industry Future
There is a reason to believe that the trend will continue strong in enrollment in medical and healthcare education and CPA training in US market.
Numbers
General Financial Performance of Companies In the Sector
It seems that demand for regular postsecondary education that companies in this sector provides has decreased significantly in the past three years as indicated by decreased enrollment. The demand for career-oriented education service such as medical& healthcare and accounting, which are the major focus of these companies, had been flat between 2015 and 2017 but increased in 2018. Spinning off of postsecondary education business activities increased.
This is a high margin sector (a typical gross margin and operating margin was 46% and 12%). However, what we have been seeing is that as the growth in enrollment slowed down for their postsecondary schools companies had experienced increasing pressure on their margins and have to cutting their spending on SG&A to keep margin high. Without the postsecondary schools, the gross margin was improved to about 48% and operating margin was improved to about 17%.
According to our analysis, the current companies’ enterprise price/EBI ratio is around 22 with an interest/EBITDA ratio of 5%.
