Education company Lincoln Educational (NASDAQ: LINC) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 13.2% year on year to $116.5 million. The company’s full-year revenue guidance of $495 million at the midpoint came in 1.2% above analysts’ estimates. Its GAAP profit of $0.05 per share was significantly above analysts’ consensus estimates.

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“Our operating and financial momentum continued to build throughout the second quarter as we generated nearly 22 percent student start growth and grew revenues by more than 15 percent from campus operations, as well as increased consolidated adjusted EBITDA by 68%. As a result of our performance continuing to exceed expectations during the first half of 2025, and current operating trends, we are raising our full-year guidance,” said Scott Shaw, President and CEO.

Company Overview

Established in 1946, Lincoln Educational (NASDAQ: LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Lincoln Educational grew its sales at a 10.9% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Lincoln Educational’s annualized revenue growth of 14.1% over the last two years is above its five-year trend, but we were still disappointed by the results.

Lincoln Educational also discloses its number of enrolled students, which reached 14,356 in the latest quarter. Over the last two years, Lincoln Educational’s enrolled students averaged 9.4% year-on-year growth. Because this number is lower than its revenue growth during the same period, we can see the company’s monetization has risen.

This quarter, Lincoln Educational reported year-on-year revenue growth of 13.2%, and its $116.5 million of revenue exceeded Wall Street’s estimates by 0.5%.

Looking ahead, sell-side analysts expect revenue to grow 9.5% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges.

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Operating Margin

Lincoln Educational’s operating margin has been trending up over the last 12 months and averaged 3.7% over the last two years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports lousy profitability for a consumer discretionary business.

This quarter, Lincoln Educational generated an operating margin profit margin of 2.5%, up 3.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Lincoln Educational’s EPS grew at an unimpressive 7.5% compounded annual growth rate over the last five years, lower than its 10.9% annualized revenue growth. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

In Q2, Lincoln Educational reported EPS at $0.05, up from negative $0.02 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Lincoln Educational to perform poorly. Analysts forecast its full-year EPS of $0.46 will hit $0.46.

Key Takeaways from Lincoln Educational’s Q2 Results

We were impressed by how significantly Lincoln Educational blew past analysts’ EPS expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. On the other hand, its number of enrolled students missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 3.4% to $24.55 immediately after reporting.

Lincoln Educational may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.