Graham Holdings Co (NYSE: GHC)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0000104889
Market Cap 5.47 Bn
P/B 1.42
P/E 12.27
P/S 1.91
ROIC (Qtr) 3.16
Div Yield % 0.73
Rev 1y % (Qtr) 5.94
Total Debt (Qtr) 1.17 Bn
Debt/Equity (Qtr) 0.26
Add ratio to table...

About

Graham Holdings Company (GHC), also known as GHC, operates in a variety of industries including educational services, television broadcasting, manufacturing, healthcare, and automotive dealerships, among others. The company's educational services segment, Kaplan, is a leading provider of educational services worldwide. Kaplan offers a wide range of products and services, including academic preparation programs, test preparation, and career and academic advisement services. These offerings cater to students, schools, colleges, universities, and businesses,...

Read more

Investment thesis

Bull case

  • Operating cash flow of 435.21M provides exceptional 37.47x coverage of minority interest expenses 11.62M, showing strong core operations.
  • Operating cash flow of 435.21M provides strong 67.95x coverage of stock compensation 6.41M, indicating sustainable incentive practices.
  • Strong tangible asset base of 6.05B provides 5.15x coverage of total debt 1.17B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 361.36M exceeds capital expenditure of 73.85M by 4.89x, indicating strong organic growth funding capability.
  • Tangible assets of 6.05B provide exceptional 14.20x coverage of deferred revenue 425.62M, showing strong service capability backing.

Bear case

  • Operating cash flow of 435.21M barely covers its investment activities of (125.01M), with a coverage ratio of -3.48, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 435.21M provides thin coverage of dividend payments of (30.93M) with a -14.07 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 237.10M provide limited coverage of acquisition spending of (11.79M), which is -20.11x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 435.21M provides insufficient coverage of deferred revenue obligations of 425.62M, which is 1.02x, raising concerns about future service delivery capabilities.
  • Short-term investments of 1.01B significantly exceed cash reserves of 237.10M, which is 4.24x, indicating potentially excessive yield-seeking behavior at the expense of liquidity.

Subsegments Consolidation Items Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

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 0.77 0.71
EV to Cash from Ops. EV/CFO 27.35 6.80
EV to Debt EV to Debt 5.18 11.15
EV to EBIT EV/EBIT 8.95 112.78
EV to EBITDA EV/EBITDA 17.05 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 36.88 5.57
EV to Market Cap EV to Market Cap 1.11 582,173.64
EV to Revenue EV/Rev 2.12 1.74
Price to Book Value [P/B] P/B 1.42 -3.80
Price to Earnings [P/E] P/E 12.27 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 23.68 11.73
Dividend Payout Ratio % Div Payout % (Qtr) 4.30 2.21
Dividend per Basic Share Div per Share (Qtr) 7.20 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 8.64 1.69
Interest Coverage Int. cover (Qtr) 7.12 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 17.92 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -15.99 25.11
Dividend Growth (1y) % Div 1y % (Qtr) 4.65 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 149.93 -39.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 13.40 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) 140.90 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) 208.12 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) 225.22 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) 40.03 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.41 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.62 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.06 0.01
Cash Ratio Cash Ratio (Qtr) 0.14 0.73
Current Ratio Curr Ratio (Qtr) 1.32 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.26 3.83
Interest Cover Ratio Int Coverage (Qtr) 7.12 53.05
Times Interest Earned Times Interest Earned (Qtr) 7.12 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 28.30 -30.62
EBIT Margin % EBIT Margin % (Qtr) 24.26 -82.13
EBT Margin % EBT Margin % (Qtr) 20.86 -47.07
Gross Margin % Gross Margin % (Qtr) 30.50 50.48
Net Profit Margin % Net Margin % (Qtr) 14.90 -48.61