A few numbers...and how a PE of 47x turns into 5.5x

47x...that's the PE you see when looking at many sites to see EDU's PE multiple.That is based on a 75c share price (current) divided by last year's EPS of 1.6c. That is not going to get anyone's attention. Sometimes you will see the PE being around 12.7x and that happens when you take the trailing twelve month's earnings ie the 12 months to June 2025. You might get a bit of attention there. On the 26th February the PE will change to 7.3X when the earnings for FY25 of around $15m is officially announced and can be put into the tables.
Now for FY26...this forecast has of course been made much, much harder by the recent change in legislation impacting agents' commissions and what impact that will have on the growth rate for new EDU students at IKON. What we do know is that H2 FY25 will have produced earnings of around $8.7m and that T1 numbers for IKON will be strong (per the last ASX release). We also know that student completions will be low at IKON for FY26, I am guessing 1000 to 1200. We also know that there will be 12% fewer shares in issue post the big 55c buy back, almost certainly to be ratified in February. We also know that ALG will go backwards somewhat but it is now pretty small and that 'growth' costs and investment expenditure will accelrate at IKON. New student numbers for IKON in T2 and T3 are the big unknowns and management will no doubt be pushed on this when results are released on 26 February. But let's say EDU earns $18m in FY26...that equates to 14.5c per share or fully diluted for the performance options around 13.4c. So the foreward PE suddenly becomes 5.2x or 5.6x fully diluted. Prior to the change in regulation I had EDU earning well over $20m. A PE around 5.5x will grab the market's attention without a doubt.
The market is clearly asking the question 'how bad could this change in legislation be?' and it is a most justifiable concern. This will of course be the 'topic du jour' on 26 February and how management answers these concerns and how readily the market accepts their answers will give us the direction of EDU over the first half of 2026. However if management can successfully pivot elsewhere over a medium term timeframe, and that is my belief, then a stock on a starting PE of 5.5x is likely to provide quite an exciting ride.