Stock market performance in the for-profit education industry has remained fairly steady in the K-12 sector over the past year, analysts say.
J. Mark Jackson, a senior analyst at Eduventures Inc., a Boston-based market-research firm that tracks education businesses, has been closely watching about 15 companies that do a lot of business in the K-12 world and serve as something of an indicator of the overall health of the market. Of those companies, nine had closed within 80 percent of their 52-week highs as of the middle of last week.
Education companies are “trading within an acceptable range,” Mr. Jackson said. “But returns overall are mixed.”
He noted that while some 500 companies provide K-12 education-related services, fewer than 100 of those companies control 98 percent of the $20 billion in instruction-related expenditures.
Some education companies have seen significant revenue jumps over the past year.
For instance, the price of shares of Bright Horizons Family Solutions (Nasdaq: BFAM), a Watertown, Mass.-based provider of early-childhood-education programs and employer-sponsored child care, has steadily risen over the past year, closing at $59.88 per share on Oct. 26. The company reported recently that revenues jumped 18 percent in the third quarter, compared with the same quarter in 2003.
But some other education companies are struggling with lower-than-expected earnings.
AlphaSmart Inc. (Nasdaq: ALSM), a Los Gatos, Calif.-based maker of portable computers for schools, saw its stock price drop by more than half, from a high of $6.98 per share in early February to $3.13 last week.
Similarly, third-quarter revenues for the computer company were down compared with the third quarter of 2003, from $10.6 million to $8.8 million.
“Softness in technology spending in the K-12 education market has continued to impact our quarterly revenue and earnings, as well as our outlook,” Ketan D. Kothari, AlphaSmart’s chairman and chief executive officer, said in a statement. “We have been particularly vulnerable to deferred purchasing decisions by certain school districts.”
Beyond those developments, Mr. Jackson of Eduventures says that the education market has continued a trend toward greater consolidation.
He pointed to School Specialty Inc. as an example. The Greenville, Wis.-based supplies company has acquired several companies since 2002.