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During the IPO season Francis Gaskins, editor of & director of research for, regularly appears on CNBC TV, Bloomberg, & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg... More
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  • Rosetta Stone's IPO (RST) is better than Bridgepoint Education's IPO (BPI) 0 comments
    Apr 14, 2009 12:30 PM | about stocks: RST, BPI, APEI, APOL, BBBB, CECO, COCO, CPLA, DV, EDU, ESI, LINC, LOPEQ, STRA, SYMC

    (NYSE:RST) & (NYSE:BPI) both scheduled for April 13wk


    (1) Both are educational stocks
    . Rosetta Stone provides language learning software
    . Bridgepoint Ed provides post-secondary online education

    (2) Both report revenues for 2008 in the $200mm range & both were profitable in 2008

    (3) Both have good internal growth track records

    (4) The trailing 12 mos P/E ratios are in the same range at price range mid-points:  23.4x for Rosetta; 29.7x for Bridgepoint


    (1) Rosetta is a market segment leader with a differentiated product

    (2) 95% of Rosetta's sales are in the US, and growth plans are set for international expansion

    (3) Rosetta's gross margin is higher, 87% versus 71% for Bridgepoint

    (4) Price-to-book value is more favorable for Rosetta: 2.7 versus 20.8 for Bridgepoint

    (5) Online comparables to Bridgepoint suggest it is fairly priced (trailing 12 months) relative to Capella Education (NASDAQ:CPLA) at 28x and Strayer Education (NASDAQ:STRA) at 29x.  The range is wide, however, with Apollo (NASDAQ:APOL) at 15x ($10bb market cap) and Grand Canyon (NASDAQ:LOPE) at 93x ($677mm market cap).

    Notice that post-secondary online ed stocks sold off 15-17% since March 31, so there are some headwinds in the sector.

    Read more
    Rosetta Stone IPO:
    Bridgepoint Ed IPO:
    Disclosure: No positions


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