Grand Canyon Education, Inc. (LOPE) stock intrinsic value fair value estimate & owner earnings analysis

Grand Canyon Education does not run a university itself. Since July 2018 it has provided technology, marketing, counseling and back-office services to Grand Canyon University (GCU) and a few other schools. In return it keeps a share of tuition, 60% under the GCU agreement. Revenue was $1.106 billion in 2025, up from $779 million in 2019. Almost all of it comes from GCU. How we measured earnings. We measure owner earnings as operating cash flow, less swings in working capital, less stock compensation (a real cost), less the part of capital spending needed just to maintain the business. Owner earnings by year were about $269M (2019), $263M, $265M, $182M (2022), $194M, $229M and $241M (2025). We start the window in 2019 because the July 2018 separation from GCU changed the business. We use the median of the whole 2019-2025 window, about $240M a year, roughly $8.85 per share on the current 27.1 million shares. Owner earnings grew about 5% in 2025. We do not assume growth above that. The 2025 figure includes a $35 million settlement of a qui tam lawsuit that we did not add back, so the anchor is conservative. Per-share owner earnings rose faster than the total because the company retired about 40% of its shares since 2021. We do not count buybacks as value creation. We use today's lower share count and no assumed further buybacks. What holds the case together, and what it risks. The main risk is that GCU can end the services agreement after July 1, 2025 with at least 18 months' written notice. GCU is also not required to keep using the company afterwards. The 10-K describes the right but reports no notice. The company also depends on GCU's enrollment and on Department of Education rules on incentive pay and financial responsibility, which the qui tam settlement highlighted. Base case, about $100 per share. GCU keeps the agreement in place, and owner earnings stay flat at about $240M for roughly 20 years and then stop. We credit no growth. Enrollment growth depends on future student demand rather than a contract or a repeatable process, so we leave it out. Nothing named and evidenced supports value beyond 20 years, so we assign it zero. Bear case, about $30 per share. GCU gives notice, the agreement ends around 2031, and owner earnings run at about $200M until then and are worth nothing afterwards. The company has almost no debt, so leverage plays no part here. Bull case, about $145 per share. The record of revenue growth of about 6.5% a year since 2020 largely continues. Owner earnings start from a normal $260M (2025 without the settlement) and grow 4% a year for 10 years, then hold flat for another 10 years. What would make this wrong. The valuation is only as durable as the GCU relationship. A termination notice, a large regulatory action or an enrollment decline would push value toward the bear case. Cash and investments on the balance sheet are not in owner earnings and are not added to these values.