What: Shares of childcare centre operator G8 Education Ltd (ASX: GEM) have been amongst the market's strongest performers today, up 21 cents or 4.4% after the company released results for its first half ending 30 June 2014.
So What: A combination of organic growth and recent acquisitions helped G8 Education increase its first-half net profit by a massive 48% to $16.31 million, compared to $11 million in the same period last year. Revenues also jumped strongly, up 59% to $187.25 million, while underlying earnings per share (EPS) rose 26% to 5.21 cents. Earnings before interest and tax (EBIT) were up 77% for the half at $31.1 million.
Investors will also be pleased by the company's upped dividend. G8 Education announced that its annual dividend would be increased from 18 cents per share (cps) to 20 cps. This will apply as of October 2014, for the quarter ending 30 September.
Now What: The company's roll-out strategy has thus far proven to have been ultra successful, with shares now up 98% over the last 12 months and 746% over the last four-and-a-half years. The company today announced that it has contracts in place to acquire an additional 25 childcare centres which will be purchased at a price four times the anticipated EBIT for the 12 months post settlement. This is in line with its acquisition plan.
While G8 Education currently controls just 5% of the childcare services market in Australia, it is clear that there is still plenty of growth potential for the company and a buy today should bode very well for the long term.
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I'm a big fan of G8 Education's growth strategy and recently stated that I was considering buying the shares myself.
