G8 Education: The Hidden Gem in Early Childhood Education

Ladies and gentlemen, buckle up! Today, we’re diving into a stock that’s been flying under the radar but is poised to take off like a rocket. We’re talking about G8 Education (ASX:GEM), the powerhouse in early childhood education. This company is not just surviving in a tough economic environment; it’s thriving! Let’s break it down and see why you need to pay attention to G8 Education right now.

First things first, G8 Education’s performance in the first half of CY24 is nothing short of spectacular. The company reported operating revenue of $481.7 million, a 5.6% increase year over year. But that’s not all—centre operating earnings before interest, tax, depreciation, and amortisation (EBITDA) soared to $72.5 million, up 11.9% year on year. This is a company that knows how to manage costs and deliver earnings growth, even in a challenging environment.

Now, let’s talk strategy. G8 Education’s corporate strategy is anchored around six key focus areas: team, family experience, quality, education & inclusion, operating model, and financial sustainability. Each of these areas is paired with a KPI measure to track progress. And guess what? The company has made significant strides in five out of six domains. Overall team vacancies fell by 43% year on year, centre manager retention rates rose to 84%, and ECT rates increased to 69%. The number of student enrolments into G8 qualification programs also saw a boost, with particular strength in the diploma stream. And the family experience? The Net Promoter Score (NPS) rose by 16 points to 48, and the percentage of G8 centres rated as meeting or exceeding the National Quality Standards hit a new high of 91%.

But it’s not all sunshine and rainbows. G8 Education has faced challenges, such as lower enquiry levels, which have resulted in occupancy growth softening in Q2. However, the company’s disciplined focus on team engagement, family experience, enrolments, and transition, as well as maintaining capital and cost disciplines, has helped mitigate these challenges. The company’s network optimisation efforts, including the divestment of fifteen centres and the surrender of three other centres, further demonstrate its commitment to operational efficiency and cost management. The commencement of an on-market buyback of up to 5% of issued share capital also signals the company’s focus on returning excess financial reserves to shareholders, reinforcing the view that network optimisation as opposed to network growth will remain the focus for the foreseeable future.

Now, let’s talk about the numbers. G8 Education reported a 3.5% increase in revenue from ordinary activities, reaching $1,021,777,000 for the year ending December 31, 2024. The company’s profit after tax attributable to members rose by 20.8% to $67,688,000. The final dividend for 2024 is set at 3.5 cents per security, fully franked, with a record date of March 7, 2025, and payment date of April 3, 2025. This financial performance indicates a strong year for G8 Education, reflecting positively on its market positioning and potential shareholder returns.

So, why should you care about G8 Education? Because this company is a hidden gem in the early childhood education sector. It’s got a solid strategy, strong financial performance, and a commitment to operational efficiency. And with the current economic environment, G8 Education is poised to continue its growth trajectory. Don’t miss out on this opportunity—G8 Education is a stock you need to own!