Tuesday, Jan 6, 2009

Search Training Industry.com

Member Information

Welcome, Guest

The Training Junto

The Training Junto is an online forum established for debating questions of philosophy, strategy, and best practices - and to exchange knowledge of business issues facing the global training marketplace.

The first Junto (a latin derivative of the word "jungere", or "to join") was created by Benjamin Franklin in 1727 for the purpose of bringing friends together to have a structured discussion on political and community topics. (see Wikipedia definition of Junto.)

TrainingIndustry.com's Junto is for discussing issues from the overall training industry, as well as "community Junto’s", to address topics specific to industry segments – such as the Sales Training Junto, the IT Training Junto, the Outsourcing Junto, the Learning Technology Junto, the Finance Training Junto, and more. We invite you to participate in our online Junto and be a part of the movement to continually improve our industry and profession.

View other Community Juntos:

Should You Own Stock in a Training Company?

Wednesday, October 29, 2008 by Doug Harward

 

In today’s economy, does it make sense to own stock in a publicly traded training company? It depends on your investment goals. But it may be an interesting investment to consider. Let’s compare five training companies and how they have performed in the last 5 years to the S&P 500 index. You may know that the S&P 500 is viewed as an optimally diversified portfolio so it gives a good, but not perfect perspective of market performance. The period of performance evaluated is from 1/6/03 to 10/27/08. I chose this period because it takes us from the tail end of the .com crash to current day activity.   

 

Companies I studied are General Physics (GP), SkillSoft, Saba, New Oriental Education, and Learning Tree. All are completely focused on learning services and technologies. Each has a different strategy related to products and services for their customers. But all are well branded and respected companies in the global training market. Please note that I did not include any of the companies who provide learning services as a secondary part of their business model. Examples of these are Accenture, IBM, and Raytheon. Also not included are companies listed on foreign exchanges (e.g. India, London). Companies you might consider here are NIIT, and Aptech. Here are the findings from each of the 5 companies reviewed. .

 
  • General Physics (NYSE:GPX) – training outsourcing company; last traded for $5.30 the week of Jan 6, 2003. On Oct. 27, 2008, last traded for $7.28. Increase of 37.36% over the period.
  • SkillSoft (Nasdaq:SKIL) – e-learning and performance support solutions; last traded for $3.14 the week of Jan. 6, 2003. On Oct. 27, 2008, last traded for $7.17. Increase of 128.34% over the period.
  • Learning Tree (Nasdaq:LTRE) – training delivery services for technical and managerial training; last traded for $13.27 on Jan. 6, 2003. On Oct. 27, 2008, last traded for $10.58. Decrease of 20.27% over the period.
  • Saba (Nasdaq:SABA) – enterprise learning content management software; last traded for $.99 on Jan. 6, 2003. On Oct. 27, 2008, last traded for $1.70. Increase of 71.7% over the period.
  • New Oriental Education (NYSE:EDU) – English language training in China; last traded on Sept. 16, 2006 at $26.40. On Oct. 27, 2008, last traded for $45.84. Increase of 74% over the period (note that New Oriental Education was evaluated over a shorter period because they completed an IPO in 2006).
 

Now let’s look at the S&P 500 Index over the same period of time. I found that the S&P has dropped from 927.57 on Jan. 6, 2003 to 848.92 on Oct. 27, 2008. This represents a drop of 8.48%. Initial data shows that four of the five companies outperformed the market. Below is chart showing the trend of these 5 stocks against the S&P 500.

  Stock Index

Source: Yahoo Finance 

 

If you are interested in following the education and training industry index and comparing it to the S&P index, take a look at Education and Training Industry Index.

 

With all that said, what do you think? Are training companies a good investment over the long haul?

6 comment(s) for “Should You Own Stock in a Training Company?”

  1. Doug Harward says:
    Neale,

    The training industry in China is an immensely challenging market for training providers. Many training companies have steered away from China because of the huge risk associated with the loss of intellectual property. But other companies have been very successful there. For example, companies from India such as NIIT, Aptech, and others are very succesful in delivering training in China as they have established a strong footprint. Others like GP, Raytheon, and RWD have followed customers into the country which allowed them to create a successful business there. On another note, a couple of years ago I met with the Consulate in Shenzhen and asked what the biggest needs for training were in China. He named four areas of training in this order of priority; 1. English as a Second Language; 2. Manufacturing; 3. IT; and 4. Business Acumen. The message was they are very interested in getting the training that helps them to communicate better, perform better in the core markets they want to compete in (manuf and IT), and to be able to speak the language of the global business community. I think the biggest limiting factor for China to bring in better training is the lack of control over IP rights. This will continue to keep many good companies out that provide online training.

    Saturday, December 20, 2008

  2. Neale says:
    What's the status of the training industry in China? Surely there's a huge market there to be tapped, considering so many jobs are being moved there.

    Sunday, December 14, 2008

  3. Don Duquette says:
    Dhimant has a good point on not being large or popular enough to attract a lot of investors. The industry is so fragmented and no company has a measurable market share that causes investors to look elswhere.

    Thursday, November 06, 2008

  4. Jim Spell says:
    There is another index for the training industry published by Dow Jones. The name of the index is the Dow Jones US Business Training Index and the code is ^DJUSBE. You can find the index at http://finance.yahoo.com/q/ta?s=%5EDJUSBE. This index only shows 5 days of data. Anyone know why? And not sure who the companies are in the index. My guess is it is comprised of for-profit online colleges. Can anyone help with who the companies are?

    Friday, October 31, 2008

  5. Jerry Rasmussen says:
    Maybe we should ask Jim Cramer from TheStreet.com what he thinks about our industry. Haven't heard him mention it before. If it's not on Cramer's watch list, what does that mean for us?

    Friday, October 31, 2008

  6. Dhimant Patel says:
    Media doesn't speak much about our industry segment as it is either not large enough, or not popular enough because it isn't core business for many companies. But from your analysis, it looks like we are an industry to be taken seriously by investors.

    Thursday, October 30, 2008

Leave comment:

Data

  • (optional - remember http://)

Please help us keep this a respectful area! This is a place for our readers to discuss, debate and learn more about the training and learning topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates the best interests of our rules, please report it via the Contact Us link above.

Advertisements