COMPANY COMMENT: Cost of Stadio growth slows Curro’s earnings
Stadio still has to pass some tough tests before it assembles a business that can be compared to rival Advtech’s diversified and profitable tertiary hub
Private-education specialist Curro trades on a trailing earnings multiple of close to 100 times. To justify that dizzy rating, the company needs to grow earnings at a lick — perhaps as much as 50% a year. A trading update released on Wednesday advised shareholders that Curro’s earnings and headline earnings per share for the six months to June would come in between 26.4c and 27.5c. This would represent an increase of between 20% and 25% on the corresponding period in 2016. The slower earnings growth rate reflects Curro’s efforts to ready its tertiary education subsidiary, Stadio Holdings, for listing on the JSE. Stadio is in a development (read: rapid expansion) phase, and has incurred substantial costs as it starts to build critical operational (and academic) mass. This serves as a reminder that Stadio still has to pass some tough tests before it assembles a business that can be compared to rival Advtech’s diversified and profitable tertiary hub. While it seems Stadio is operating ...
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