(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.
Rosetta Stone IPO: http://bit.ly/18evtp
Bridgepoint Ed IPO: http://bit.ly/4DhEsY
Disclosure: No positions