EVO - Evolve Education

[Turtle2]

Nice rise this week on decent volume liking this stock

Bought in at $1.00. Was hoping for a little lower but the intraday $1.03 got me a little worried I'd miss out.

[winner69]

Article nothing to do with Evolve - but highlights that the business model is not sustainable: corporate and shareholder greed will see to that.

http://www.smh.com.au/nsw/its-shocki...17-gsrjuq.html

[percy]

Article nothing to do with Evolve - but highlights that the business model is not sustainable: corporate and shareholder greed will see to that.

http://www.smh.com.au/nsw/its-shocki...17-gsrjuq.html

As in any business if you give the customer what they want you will get what you want.
Failure to be customer focussed, your chances of staying in business are nil.
If EVO can retain being customer focussed,their prospects remain good.
It should be noted EVO's directors and CEO come from very successful customer focussed businesses.

[Beagle]

Article nothing to do with Evolve - but highlights that the business model is not sustainable: corporate and shareholder greed will see to that.

http://www.smh.com.au/nsw/its-shocki...17-gsrjuq.html

As posted before, from inside sources that's pretty much how I have heard Evolve has been run and the results in terms of the poor share price performance since listing speak for themselves. The shares are lower than when they listed just on two years ago and in the same period of time the NZX50 is up 25% including dividends. Even taking into account dividends paid by EVO their listed performance has been poor. The child care centre I referred too in early posts finally got their heat pumps, otherwise its still being run as before. Mrs Barlow as the chair...enough said

[Scrunch]

Article nothing to do with Evolve - but highlights that the business model is not sustainable: corporate and shareholder greed will see to that.

There are a number of private equity firms that look to buy well, make short-term improvements in reported profitability and flip the companies based on the new, higher earnings that their "efficient management" have generated. Buying into their IPO's can be a value destroying exercise.

I'm not sure if the private equity firm in the article is operating with this model but it may be. If it is, this article says essentially nothing about the operating model of early childhood centers and everything about private equity trying to squeeze improved profitability (before flipping). With Evolve being a long-term holder it should be concerned with both short-term reported profits and issues like reputation that will impact longer-term profitability.

Also Evolve is a larger group within the sector. This should assist its centers to be slightly more profitable than your "average" center due to scale efficiencies. If the Government then funds sufficiently for modest profitability to exist, Evolves business model can generate could sustainable profitability.

Disc holder.

[winner69]

There are a number of private equity firms that look to buy well, make short-term improvements in reported profitability and flip the companies based on the new, higher earnings that their "efficient management" have generated. Buying into their IPO's can be a value destroying exercise.

I'm not sure if the private equity firm in the article is operating with this model but it may be. If it is, this article says essentially nothing about the operating model of early childhood centers and everything about private equity trying to squeeze improved profitability (before flipping). With Evolve being a long-term holder it should be concerned with both short-term reported profits and issues like reputation that will impact longer-term profitability.

Also Evolve is a larger group within the sector. This should assist its centers to be slightly more profitable than your "average" center due to scale efficiencies. If the Government then funds sufficiently for modest profitability to exist, Evolves business model can generate could sustainable profitability.

Disc holder.

Said like a true investor and probably expecting / demanding higher profits year after year.

Hope not too much of these profits come from what Evolve call 'parental increases' and 'cost constraint'. We know what those terms mean eh

I sometimes wonder if the $20m of profits were reinvested back into the children's development would result in a better outcome for the children/caregivers. Or maybe some price relief would make care more affordable for caregivers.

It just seems that of the $135m of fees/income some $20m going into shareholders pockets seems rather excessive ......probably at the expense of the children/parents ........and not sustainable.

[winner69]

Lots of shares come out escrow next month.

Those involved say they are committed shareholders and have no intention of selling

That's good

[tim23]

Result must be due any day now?

[winner69]

"Parental increases' can't be too bad - Evolve have a NPS of +37

“Our families rave about our centres” it is said

[DarkHorse]

CEO Alan Wham made a presentation at the Shareholders Association meeting last week and noodles and I had a good chance to chat to him at length afterwards. He seems a very genuine and down to earth guy, and with a heartfelt concern for the teachers and children. Nothing "private equity...flip the company" about his attitude. He did say centre managers are crucial - they are like business owner/managers - which I think is the right way to see it.
He had tremendous mentoring at 3M and a great track record with Pharmacy Brands - he took them from a small operator with $5m mcap to $170m mcap over 10 years. He sees similarities in childcare also being a fragmented sector where it's about a public service provided by professionals who are passionate about what they do.
Evolve are not going to shoot the lights out, but look pretty low risk and inexpensive to me for a well-managed company with good cashflows and steady growth prospects over several years
There are a string of great companies which investors have lost interest in for a year or two after the initial IPO hype - Collins Foods is my favourite example of many (esp on the ASX). It's the kind of irrational investor behaviour which creates opportunities.