Founded in 1967, the company was originally a subsidiary of Ambassadors International, Inc. (AMIE). EPAX spun-off on February 28, 2002 and already enjoys a market capitalization of around $650 million. The stock is a constituent in the Clear Spin-Off Index licensed for the ETF (NYSEARCA:CSD).
The firm's operations include offering school students of all ages to travel for the purpose of learning more about the history, culture, economy and government of a country in exchange for a tuition fee. In its sports program, EPAX provides student athletes with an opportunity to travel in order to participate in foreign tournaments. The company has also been expanding its services to include a student program that offers interaction with experts in specific fields, and renowned speakers. Finally, the company's Professional Ambassador Programs provides an opportunity for adults to meet others with similar interests or careers abroad.
EPAX has a very interesting history, which seems to have created a foundation for its continued profitability in the future. Its "People to People" educational traveling program was founded by President Eisenhower, who eventually decided to privatize the program so that it would be preserved in the hands of private citizens. The program has enjoyed support from six other presidents who have served as honorary chairmen, including Bill Clinton and George W. Bush.
As we carefully scrutinize its fundamental data, we begin to see a fuller picture of the company's operations. Its operating margins are a solid 38.36%. While EPAX reported a slightly negative revenue growth figure for the last quarter, it posted a trailing twelve month gross margin of a whopping 87.10%. The firm also provided a strong 35.46% return on equity [ROE] for its shareholders. EPAX also enjoys a modest leverage as indicated by a small debt to equity ratio of 0.01.
It is hard to truly peg a single peer group for EPAX. Currently, an examination of EPAX's price to earnings (P/E) ratio of 27.08 seems like a fairly valued firm. Once we factor in growth, the company's price to earnings to growth [(PEG] ratio of 1.27 when compared to travel, education or training firms indications are that this is a spin-off that is well positioned for incremental success, and one that we should keep our eye on.
Disclosure: Ambassadors Group Inc.,[EPAX] is a constituent in the Clear Spin-Off index licensed for the Claymore/Clear Spin-Off ETF [AMEX:CSD].
Mr. Corn is CEO of Clear Indexes LLC which publishes the index and he owns shares of the ETF: CSD. He does not directly own shares in EPAX.
EPAX 1-yr chart