Is G8 Education worth more than $5 a share

Is G8 Education worth more than $5 a share? Last year, when G8 shares were trading for $3.00, we asked: Is $4 unreasonable? Seven months later, with a share price 45% higher, we ask is G8 worth more than $5? A key fundamental we try to identify in any business is their ability to deploy larger amounts of capital at high and stable, or rising, rates of return. In an attempt to see what the future may bring for G8, we graphed the reinvestment profiles of ABC Learning from 2000-2006, and G8 Education from 2009 to 2013. G8's reinvestment trend is following a similar path to that of ABC Learning's in its highly profitable early years. What we also find interesting is that GEM holds only 5% of its estimated addressable market. This leaves ample opportunity for the business to continue increasing its incremental investment for the foreseeable future. (VIEW LINK)