Industry Overview - The Zacks Schools industry is facing significant challenges, including a declining traditional student base, increased competition from public and nonprofit institutions, and rising compliance costs due to tighter regulatory oversight [1][4][5] - The industry comprises for-profit education companies offering various undergraduate, graduate, and specialized programs, focusing on career-oriented education in fields such as healthcare, technology, and skilled trades [3] Current Challenges - Margin pressures are intensifying due to rising costs in faculty, support services, marketing, and technology, coupled with aggressive enrollment competition [4] - Operational challenges include high compliance costs and vulnerability to enrollment fluctuations, which can significantly impact operating income [5][6] Demand Trends - There is a renewed demand for workforce-oriented programs, particularly in healthcare, cybersecurity, and skilled trades, driven by employers prioritizing job-ready skills [7][9] - The U.S. healthcare sector is experiencing a shortage of skilled professionals, creating opportunities for education providers to align their programs with workforce needs [8][9] Industry Consolidation - The sector is witnessing consolidation, with larger players acquiring smaller institutions to expand program offerings and achieve scale advantages [10] - Recent policy changes, such as the "Workforce Pell" initiative, are expected to enhance enrollment and pricing power for accredited programs [11] Technology Integration - The adoption of technology and digital learning platforms is becoming a key differentiator for for-profit colleges, enhancing student engagement and operational efficiency [12] Financial Performance - The Zacks Schools industry currently ranks 153 out of over 250 Zacks industries, indicating it is in the bottom 37% in terms of performance [13][14] - The industry's earnings estimates for 2026 have decreased slightly to $1.86 per share, reflecting a loss of confidence in earnings growth potential [15] Stock Performance - The industry has underperformed the S&P 500 but has fared better than the broader Zacks Consumer Discretionary sector over the past year, with a collective loss of 4.5% [17] Valuation Metrics - The industry is currently trading at a forward P/E ratio of 13.68X, significantly lower than the S&P 500's 23.24X and the sector's 17.66X [20] Notable Companies - **American Public Education, Inc. (APEI)**: Focused on military and healthcare education, APEI has seen strong enrollment growth and is expected to grow earnings by 106.5% in 2026 [27][28] - **Adtalem Global Education Inc. (ATGE)**: Gaining from enrollment momentum in healthcare education, ATGE's earnings are projected to grow 18% in fiscal 2026 [30][31] - **Stride, Inc. (LRN)**: Provides technology-driven online education, with a focus on K-12 education, and is expected to see earnings growth of 3.2% in fiscal 2026 [34][35]

Core Insights - Riverwater Partners' "Small Cap Strategy" underperformed the Russell 2000 Index in Q4 2025 and for the entire fiscal year, primarily due to stock selection focusing on high-quality stocks that lagged behind market trends [1] Company Performance - Grand Canyon Education, Inc. (NASDAQ:LOPE) was highlighted as a significant stock in the Small Cap Strategy, closing at $179.70 per share on January 22, 2026, with a one-month return of 6.75% and a 52-week gain of 4.73% [2] - Despite reporting solid operating results, Grand Canyon Education was the largest detractor in the quarter, affected by negative sentiment from peers and concerns over enrollment trends in the for-profit education sector [3] - The company reported third-quarter 2025 revenue of $261.1 million, marking a 9.6% year-over-year increase [4] Market Sentiment and Outlook - The stock's weakness was attributed to external factors such as potential government shutdowns affecting Title IV funding and regulatory uncertainty, overshadowing the company's strong execution and demand profile [3] - Riverwater Partners maintains a positive long-term outlook on Grand Canyon Education, viewing it as a high-quality compounder with a compelling growth trajectory [3]

Revenue Summary - Total consolidated revenues for Q1 Fiscal 2026 amounted to 6.3 billion euros, reflecting an organic revenue growth of +1.8% compared to Q1 Fiscal 2025 [7][14] - The revenue growth was negatively impacted by a currency effect of -4.0%, primarily due to the depreciation of the U.S. dollar against the euro [7][22] - By region, North America experienced a decline in organic growth of -1.5%, Europe saw an increase of +2.4%, and the Rest of the World achieved a significant growth of +10.2% [7][15] Regional Performance - In North America, revenues totaled 2.9 billion euros, with notable declines in Business & Administration (-7.6%) and Education (-3.6%), while Healthcare & Seniors grew by +4.4% [16] - Europe generated 2.3 billion euros in revenue, with Business & Administration growing by +2.8% and Healthcare & Seniors by +5.4%, despite a decline in Sodexo Live! [19] - The Rest of the World reported revenues of 1.1 billion euros, driven by strong performances in Australia, India, Brazil, and Chile, with Business & Administration growing by +9.6% [20] Operational Priorities and Outlook - The company aims to enhance client centricity, invest in personnel, and improve operational efficiency as part of its strategic priorities [4][11] - Fiscal 2026 guidance remains unchanged, with organic revenue growth expected between +1.5% and +2.5%, and a slight decrease in underlying operating profit margin compared to Fiscal 2025 [6][11] - Planned investments in technology and targeted initiatives in U.S. Education are underway to support medium-term performance [8][11] Leadership and Sustainability - Thierry Delaporte, the new CEO, has taken direct leadership of North America to drive performance in the region [11] - Sodexo has been recognized on CDP's A-List for climate performance, highlighting its commitment to sustainability and transparency [11][13]

Core Viewpoint - The Guangxi region has made significant progress in education during the "14th Five-Year Plan" period, focusing on prioritizing education development and achieving key goals in educational planning [1] Group 1: Educational Development Achievements - The region has established a comprehensive ideological and political education system across 14 cities, promoting national unity and awareness [1] - By 2024, the gross enrollment rate for preschool education is expected to reach 93.7%, with a 96.9% retention rate for nine-year compulsory education and a 92.9% gross enrollment rate for high school [2] - The number of new basic education seats has increased by 660,000, and 17 new public university campuses have been established [2] Group 2: Quality of Education - The number of students enrolled in ordinary undergraduate and vocational colleges is projected to reach 1.515 million by 2025, a 27.9% increase from 2020 [3] - The number of full-time teachers has increased to 762,700, a 12.85% rise since 2020, with a notable increase in teachers holding bachelor's degrees [3] - The region has achieved full coverage of public kindergartens in towns and a 95.1% enrollment rate for children of migrant workers in public compulsory education schools [2] Group 3: Support and Service Capabilities - During the "14th Five-Year Plan," higher education institutions have trained 1.996 million talents, with vocational education supplying over 70% of new high-quality skilled workers [4] - Guangxi universities have established partnerships with nearly 200 institutions in ASEAN countries, contributing to the development of 17 China-ASEAN Modern Craftsman Colleges [4] - The region has optimized vocational education structures and established multiple industry-education integration communities [4]

Core Insights - Access Investment Management LLC increased its stake in John Wiley & Sons by purchasing 66,660 shares for an estimated $2.69 million, reflecting confidence in the company's direction [2][9][10] - Post-transaction, Access Investment Management holds a total of 155,940 shares valued at $6.31 million, which constitutes 1.7% of its reported U.S. equity assets under management (AUM) [1][3] Financial Performance - John Wiley & Sons reported trailing twelve-month (TTM) revenue of $1.67 billion and a net income of $97.30 million, with a dividend yield of 3.7% [4][10] - As of November 3, 2025, the share price was $37.47, which is down 24.0% over the past year, underperforming the S&P 500 by 41.4 percentage points [3][4] Company Overview - John Wiley & Sons is a global research and education publisher with a diversified portfolio that includes journals, books, and digital learning solutions, serving academic, professional, and corporate customers [5][6] - The company generates revenue through subscriptions, licensing of journals, direct sales of content, and online program management services [8][10] Strategic Direction - The company is focusing on its core business model, which relies on peer-reviewed journals and recurring contracts, while also exploring new revenue streams through AI licensing agreements [10][11] - John Wiley & Sons is undergoing a restructuring process to streamline operations and build a steadier foundation for growth, emphasizing disciplined execution for future success [10][11]

Market Overview - Wall Street reached record-high levels despite a turbulent first half of 2025, with the second quarter being the best for U.S. stocks in the past year due to expectations of key trade deals and reduced recession fears [1] - The Federal Reserve indicated two more cuts in the benchmark lending rate for the second half of the year, contributing to a continued bull run in July, with the S&P 500 and Nasdaq Composite hitting all-time highs [2] Stock Performance - A selection of stocks has shown significant price strength, particularly those on a recent bull run, indicating potential for continued momentum [3] - Notable stocks include RF Industries Ltd. (RFIL), Legacy Education Inc. (LGCY), Primoris Services Corp. (PRIM), Allot Ltd. (ALLT), and Euroseas Ltd. (ESEA) [3] Stock Screening Criteria - Stocks must show a percentage change in price greater than zero over the last four weeks and greater than 10% over the last 12 weeks to indicate sustained momentum [5] - Stocks should have a Zacks Rank of 1 (Strong Buy) and an average broker rating of 1, indicating strong future performance expectations [6] - Stocks must be trading at a minimum price of $5 and be within 85% of their 52-week high to ensure they are strong performers [7] Individual Stock Highlights - **RF Industries Ltd. (RFIL)**: Stock surged 74% in four weeks, with expected earnings growth over 100% for the current fiscal year [8][10] - **Legacy Education Inc. (LGCY)**: Stock price increased by 29.6% in four weeks, with an expected earnings growth rate of 0.8% [12] - **Primoris Services Corp. (PRIM)**: Stock climbed 23.4% in four weeks, with an expected earnings growth rate of 15.8% [14] - **Allot Ltd. (ALLT)**: Stock surged 19.8% in four weeks, with expected earnings growth over 100% [17] - **Euroseas Ltd. (ESEA)**: Stock advanced 12.6% in four weeks, with an expected earnings growth rate of 1.2% [19]

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $43.7 million or $0.65 per diluted share, compared to $39.4 million or $0.59 per diluted share in the prior year, reflecting a year-over-year increase [12] - Adjusted earnings per diluted share increased to $0.70 from $0.60, representing a 16.7% growth [12] - First quarter revenue reached $213 million, a 26.6% increase from $168.3 million in the prior year, with $39.2 million attributed to the St. Augustine acquisition [13] Business Line Data and Key Metrics Changes - Revenue at CTU was $119.6 million, up 5.3% year-over-year, while operating income increased to $46.1 million from $42.2 million [18] - AIU System's revenue was relatively flat at $54.1 million, but operating income rose 28% to $11.9 million due to lower operating expenses [18] - St. Augustine generated $39.2 million in revenue, contributing positively to overall adjusted operating results [19] Market Data and Key Metrics Changes - Total enrollments at CTU increased by 10.6% year-over-year, while AIU System saw a decrease of 4.5% in total enrollments [14] - St. Augustine had approximately 4,200 students enrolled during the spring term, with expectations for growth in summer and fall terms [10][17] Company Strategy and Development Direction - The company is focused on enhancing student experiences and academic outcomes to support sustainable growth [5] - Strategic investments in technology and personnel are being made to grow corporate student programs at CTU and AIU [7] - The company plans to continue adjusting marketing strategies to effectively engage prospective students [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the remainder of 2025, citing high levels of student retention and engagement [6] - The company expects organic revenue and total enrollments to increase for each remaining quarter in 2025 [16] - Future growth is anticipated from the St. Augustine acquisition and ongoing interest from prospective students [25] Other Important Information - The company returned approximately $34.4 million to shareholders through dividends and stock repurchases, buying back 985,000 shares during the quarter [9] - The effective tax rate for the quarter was 22.7%, with expectations for the full year to be between 25.5% and 26.5% [20] Q&A Session Summary - No specific questions or answers were provided in the content regarding the Q&A session.

Core Business Performance - New Oriental Education reported ongoing deceleration in its core education business for FY3Q25, with results for the three-month period ending March 31 indicating a continued decline [1] - The overseas business segment is beginning to show signs of growth, contrasting with the domestic education sector's performance [1] Investment Insights - Astrada Advisors emphasizes actionable recommendations that enhance portfolio performance and uncover alpha opportunities, leveraging a strong track record in investment research [1] - The firm specializes in identifying high-potential investments across technology, media, internet, and consumer sectors in North America and Asia [1] - The research integrates rigorous fundamental analysis with data-driven insights, providing a nuanced understanding of key trends and competitive landscapes [1]