What’s Happening to G8 Education Ltd’s Share Price?

What does G8 Education Ltd do?

G8 Education Ltd [ASX:GEM] is the largest listed childcare operator in Australia. The company operates 475 centres across Australia. They also have a footprint in Singapore, with 14 centres there. All up they have a combined licensed capacity for 35,221 places.

The aim for the company was to be the biggest childcare operator in the country. They’ve achieved that now.  Managing director Chris Scott said the rate of acquisitions has already slowed, and attention is now focused on quality of care.

What’s happening to drive the share price?

The company released their full year results on 22 February. Revenue of $706.2 million, up 44%. Net profit came in at $88.6 million, up 68%. Of note, the group returned $87.9 million in dividends to shareholders.

There is real demand for childcare services. It takes two wages these days to make ends meet. This forces families to put their kids into childcare facilities. And there is continuing pressure on governments to subsidise it. As long as childcare centres are run well, they should turn a reasonable profit. G8 are doing just that.

What now for G8 Education?

The share price formed a solid low in July last year at $2.86. It tested and confirmed that support in October. Since October last year, the share price has been finding higher levels of support.

Firstly at $3.10 in January–February this year, and now it is finding higher support at $3.60.  That tells you what you need to know.

The weekly trend is up now. Until the chart says otherwise, the outlook for this company looks satisfactory.

Terence Duffy,
Cycles, Trends and Forecasts

Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come — which he details in Cycles, Trends and Forecasts.

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