The G8 Education Ltd (ASX: GEM) share price is in the buy zone according to leading broker Ord Minnett.
A research note released on Friday reveals that its analysts have upgraded the childcare operator from a hold rating to accumulate with a $3.78 price target.
Whilst this price target is approximately 6% higher than the current share price, when you include its forecast fully franked 6.7% dividend it becomes a little more appetising.
Ord Minnett believes margins have now stabilised and appears optimistic that new CEO Gary Carroll will be the start of a new chapter for the company.
I completely agree with Ord Minnett on this one and can't help but feel that G8 Education is a great investment at the current share price.
With its shares trading at 14x trailing earnings and providing a generous dividend that even beats Westpac Banking Corp (ASX: WBC) and the rest of the big four banks, the childcare operator could prove to be a bargain buy.
Whilst FY 2016 has been reasonably mixed after a poor first half, I was pleased to see the company's performance pick up in the second half.
In December management released a market update which revealed that full year earnings before interest and tax is expected to be between $158 million and $162 million, compared to $160 million in FY 2015.
I'm optimistic that the company will hit the top end of its guidance range and then take the second-half momentum through into FY 2017.
Whilst I think G8 Education is a buy currently, prudent investors may want to hold out until the release of its full year results in mid-February.
