ATA Creativity Global (NASDAQ: AACG)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001420529
Market Cap 31.47 Mn
P/B 3.81
P/E -26.40
P/S 0.80
ROIC (Qtr) -247.09
Div Yield % 0.00
Rev 1y % (Qtr) 0.07
Total Debt (Qtr) 9.25 Mn
Debt/Equity (Qtr) 1.12
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About

ATA Creativity Global (AACG) is an international educational services provider, specializing in the cultivation and enhancement of students' creativity. The company operates primarily in the Chinese market, providing a range of services aimed at supporting students' educational goals and aspirations. ATA Creativity Global's main business activities revolve around portfolio training, research-based learning services, overseas study counselling, and other educational services. These services are designed to assist students in their application process...

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Investment thesis

Bull case

  • Healthy cash reserves of 13.60M provide 2x coverage of short-term debt 6.78M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 32.55M provides 3.52x coverage of total debt 9.25M, indicating robust asset backing and low credit risk.
  • R&D investment of 440772.61 represents significant 10.52x of receivables 41906.74, indicating innovation-driven growth.
  • Tangible assets of 32.55M provide robust 776.71x coverage of receivables 41906.74, showing strong asset quality.

Bear case

  • Investment activities of 0 provide weak support for R&D spending of 440772.61, which is 0x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 0 provides insufficient coverage of deferred revenue obligations of 41.07M, which is 0x, raising concerns about future service delivery capabilities.
  • Operating cash flow of 0 provides minimal -0x coverage of tax expenses of (537199.02), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • R&D investment of 440772.61 represents just 0.02x of SG&A expenses of 23.69M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Operating cash flow of 0 barely covers operating expenses of (560197.89) with a -0 ratio, suggesting thin operational efficiency margins and limited flexibility.

Peer comparison

Companies in the Education & Training Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EDU New Oriental Education & Technology Group Inc. 9.35 Bn 24.58 1.82 0.78 Bn
2 TAL TAL Education Group 6.18 Bn 22.22 2.20 0.38 Bn
3 GHC Graham Holdings Co 5.47 Bn 12.27 1.91 1.17 Bn
4 LAUR Laureate Education, Inc. 5.20 Bn 25.55 3.29 0.44 Bn
5 LOPE Grand Canyon Education, Inc. 4.62 Bn 21.85 4.23 0.11 Bn
6 LRN Stride, Inc. 3.61 Bn 11.32 1.43 0.56 Bn
7 ATGE Covista Inc. 3.46 Bn 13.66 1.83 0.73 Bn
8 PRDO PERDOCEO EDUCATION Corp 2.84 Bn 42.39 1.73 0.06 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets -0.10 0.71
EV to Cash from Ops. EV/CFO 13.69 6.80
EV to Debt EV to Debt -0.68 11.15
EV to EBIT EV/EBIT 3.53 112.78
EV to EBITDA EV/EBITDA 2.43 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 1.96 5.57
EV to Market Cap EV to Market Cap -0.20 582,173.64
EV to Revenue EV/Rev -0.16 1.74
Price to Book Value [P/B] P/B 3.81 -3.80
Price to Earnings [P/E] P/E -26.40 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 11.73
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.21
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Dividend Payout Ratio % 0.00 1.69
Interest Coverage Int. cover (Qtr) 39.08 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 145.76 25.11
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 79.12 -39.04
EBITDA Growth (1y) % EBITDA Growth (1y) % 0.00 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) 75.19 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) 75.27 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) 81.54 -29.51
FCF Growth (1y) % FCF Growth (1y) % 0.00 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.59 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.08 0.63
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.25 0.73
Current Ratio Curr Ratio (Qtr) 0.33 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 1.12 3.83
Interest Cover Ratio Int Coverage (Qtr) 39.08 53.05
Times Interest Earned Times Interest Earned (Qtr) 39.08 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 0.00 -30.62
EBIT Margin % EBIT Margin % (Qtr) -32.14 -82.13
EBT Margin % EBT Margin % (Qtr) -4.40 -47.07
Gross Margin % Gross Margin % (Qtr) 51.40 50.48
Net Profit Margin % Net Margin % (Qtr) -3.00 -48.61