Northland analyst Luke Horton has initiated coverage of Lincoln Educational Services Corporation (LINC, Financial) with an Outperform rating, setting a price target of $24. The firm expresses confidence in Lincoln's strategic positioning within the education sector, highlighting its potential to capitalize on macroeconomic trends such as the increasing demand for skilled trades and healthcare professionals. Additionally, there is a noted shift away from expensive four-year college degrees, which could further benefit Lincoln's growth prospects.
With these favorable conditions, the analyst anticipates significant opportunities for Lincoln to expand its market presence and improve its valuation. As the company continues to implement its growth strategy, the potential for substantial multiple expansion becomes apparent, making it an attractive choice for investors looking for opportunities in the education space.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Lincoln Educational Services Corp (LINC, Financial) is $22.50 with a high estimate of $24.00 and a low estimate of $21.00. The average target implies an upside of 31.50% from the current price of $17.11. More detailed estimate data can be found on the Lincoln Educational Services Corp (LINC) Forecast page.
Based on the consensus recommendation from 4 brokerage firms, Lincoln Educational Services Corp's (LINC, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Lincoln Educational Services Corp (LINC, Financial) in one year is $10.33, suggesting a downside of 39.63% from the current price of $17.11. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Lincoln Educational Services Corp (LINC) Summary page.
LINC Key Business Developments
Release Date: February 24, 2025
- Revenue Growth: Q4 revenue increased by 16.4% to $119.4 million.
- Student Starts: Grew by 9.6% in Q4, marking 9 consecutive quarters of growth.
- Adjusted EBITDA: Increased 22% to $19.2 million in Q4, with a margin of 16.1%.
- Net Income: Q4 net income was $6.8 million, or $0.22 per diluted share.
- Cash Flow from Operations: Generated approximately $30 million in Q4, up 38% from the prior year.
- Cash and Liquidity: Ended the year with nearly $60 million in cash and total liquidity of nearly $100 million.
- Full Year Revenue: $440.1 million, reflecting a 16.4% year-over-year growth.
- Full Year Adjusted EBITDA: Increased nearly 60% to $42.3 million.
- Full Year Adjusted Net Income: $17.3 million, up 70% from the prior year.
- Capital Expenditures: $64.1 million for the full year, with 70% related to growth initiatives.
- 2025 Guidance: Revenue of $480 million to $490 million, adjusted EBITDA of $55 million to $60 million, and net income of $8 million to $13 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lincoln Educational Services Corp (LINC, Financial) achieved or exceeded all of its guidance metrics for 2024, demonstrating strong operational and financial performance.
- The company reported a 16% increase in revenue for the fourth quarter, driven by a 10% growth in student starts and a 14% rise in the student population.
- Lincoln's hybrid teaching model, Lincoln 10, has been successfully implemented, providing flexibility and efficiency, and is now used by 65% of the student population.
- The East Point campus in Atlanta, a new greenfield campus, exceeded internal objectives by enrolling over 700 students and operating profitably by the third quarter.
- Lincoln Educational Services Corp (LINC) has strong financial resources, with nearly $60 million in cash and no debt, supporting its growth strategies and shareholder returns.
Negative Points
- Operating expenses increased to $108.4 million in the fourth quarter, primarily due to costs associated with servicing a larger student population and expansion activities.
- The company is exiting lower ROI programs such as cosmetology, culinary, and massage therapy, which may impact short-term revenue from these segments.
- There are concerns about potential delays in Title IV funds and expansions due to turmoil within the Department of Education.
- The demand for collision programs has softened, leading to the decision to phase out such programs at certain campuses.
- The nursing program at the Paramus campus is currently unable to enroll new students until pass rates meet the required benchmarks, impacting growth in this segment.
