Why the Think Childcare (ASX:TNK) share price is up 2% today

Childcare owner and operator, Think Childcare's share price is climbing higher today, up 2%. We take a look at why…

tiny asx share price growth represented by little girl looking surprised

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Think Childcare Ltd (ASX: TNK) share price is climbing today after a positive earnings update for the 2020 calendar year (CY20).

At the time of writing, the Think Childcare share price is trading 2.2% higher at $1.62.

Why is the Think Childcare share price higher today?

In this morning's ASX release, Think Childcare upgraded its guidance for its earnings before interest, tax, depreciation and amortisation (EBITDA).

The company had forecast underlying CY20 EBITDA of $22–23 million in its guidance provided on 2 November. This came as COVID restrictions eased and Victoria emerged from strict lockdown measures.

However, due to better than expected trading in November – driven by a strong recovery in headline revenue and continued roster management and cost controls – EBITDA for the year through 30 November came in ahead of expectations.

Think Childcare now expects that with the overall improvement in business conditions in December, underlying EBITDA for the full 2020 calendar year will come in at $24–25 million.

The company advised its cash position and facility headroom are strong, with a closing cash position as at 30 November of $22.1 million.

Think Care also provided an update on the 23 November buyout proposal from Busy Bees Early Learning Australia for an all cash consideration of $1.75 per share. (At time of writing the stock is trading for $1.62 per share.)

The company noted that Alceon Private Equity, which had proposed $1.35 per share on 16 November for its own buyout plan, hasn't submitted a counter proposal and doesn't intend to submit a binding proposal. Think Care is still in discussion with Busy Bees, but notes there is no certainty that the proposal will eventuate into a binding transaction.

Think Childcare share price and company snapshot

Think Childcare Group owns, operates, and manages childcare centres in Australia.

When much of Australia went into lockdown and some childcare centres were forced to close earlier this year due to the coronavirus pandemic, Think Childcare's share price plummeted 54% from 27 February through to 25 March.

Shares reached a 12-month high of $1.66 on 27 November before retracing slightly to the current $1.62 per share.

Year-to-date the Think Childcare share price is up 14%. By comparison the broader All Ordinaries Index (ASX: XAO) is up 2% in 2020.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A piggy bank on the cloud in the blue sky symbolising a record high share price.
52-Week Highs

12 ASX 200 shares that smashed historical peak prices today

Twelve ASX 200 shares rose to new multi-year peaks in an otherwise quiet day of trading.

Read more »

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors saw another day of mild gains for the stock market this Thursday.

Read more »

Two boats on the water with crates with the words trade war in the middle.
Share Market News

Trump's tariffs blocked by trade court: Which ASX 200 stocks could benefit the most?

These 3 ASX 200 stocks have heavy tariffs exposure.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Broker Notes

How this undervalued ASX All Ords share could rocket 80% in a year

A leading fund manager expects a big turnaround for this beaten-down ASX All Ords stock.

Read more »

Man looking happy and excited as he looks at his mobile phone.
Share Gainers

Why Champion Iron, Clarity Pharmaceuticals, St Barbara, and Woodside shares are charging higher today

These shares are having a good session today. But why are investors buying them?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why ALS, Black Cat, Boss Energy, and Soul Patts shares are falling today

These shares are falling on Thursday. Let's find out why.

Read more »

A car dealer stands amid a selection of cars parked in a showroom.
Broker Notes

Up 77% in a year, guess how much more upside Macquarie tips for Eagers Automotive shares

Macquarie released its latest analysis on Eagers Automotive fast rising shares this morning.

Read more »

Boy looks quizzical standing in front of a graph.
Share Market News

Big ASX 200 news! Stock market whipsaws as Trump's tariffs struck down

Markets initially surged on news that Trump's tariffs are out.

Read more »