KinderCare Learning Companies, Inc. (NYSE: KLC)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001873529
Market Cap 348.86 Mn
P/B 0.37
P/E -5.03
P/S 0.13
ROIC (Qtr) 1.17
Div Yield % 0.00
Rev 1y % (Qtr) 0.80
Total Debt (Qtr) 2.52 Bn
Debt/Equity (Qtr) 2.70
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About

Investment thesis

Bull case

  • Tangible assets of 2.32B provide exceptional 78.72x coverage of deferred revenue 29.51M, showing strong service capability backing.
  • Operating cash flow of 193.43M provides strong 6.55x coverage of deferred revenue 29.51M, indicating service delivery capability.
  • Operating cash flow of 193.43M fully covers other non-current liabilities 110.84M by 1.75x, showing strong long-term stability.
  • Tangible assets of 2.32B provide robust 23.99x coverage of other current liabilities 96.86M, indicating strong asset backing.
  • Cash reserves of 174.73M provide solid 1.58x coverage of other non-current liabilities 110.84M, indicating strong liquidity.

Bear case

  • Operating cash flow of 193.43M barely covers its investment activities of (152.96M), with a coverage ratio of -1.26, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 174.73M provide limited coverage of acquisition spending of (17.97M), which is -9.73x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 193.43M shows concerning coverage of stock compensation expenses of 131.90M, with a 1.47 ratio indicating potential earnings quality issues.
  • Free cash flow of 61.30M provides weak coverage of capital expenditures of 132.13M, with a 0.46 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 65.44M show weak coverage of depreciation charges of 122.28M, with a 0.54 ratio indicating high capital intensity and potential reinvestment needs.

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 0.69 0.71
EV to Cash from Ops. EV/CFO 13.95 6.80
EV to Debt EV to Debt 1.07 11.15
EV to EBIT EV/EBIT 41.24 112.78
EV to EBITDA EV/EBITDA 15.26 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 44.02 5.57
EV to Market Cap EV to Market Cap 7.74 582,173.64
EV to Revenue EV/Rev 1.00 1.74
Price to Book Value [P/B] P/B 0.37 -3.80
Price to Earnings [P/E] P/E -5.03 -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 Div Payout % (Qtr) 0.00 1.69
Interest Coverage Int. cover (Qtr) 0.57 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -24.23 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 27.32 25.11
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -48.83 -39.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -46.90 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) -71.52 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) -169.39 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) -240.98 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) 32.83 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -7.50 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.69 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.37 0.73
Current Ratio Curr Ratio (Qtr) 0.71 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 2.70 3.83
Interest Cover Ratio Int Coverage (Qtr) 0.57 53.05
Times Interest Earned Times Interest Earned (Qtr) 0.57 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.00 -30.62
EBIT Margin % EBIT Margin % (Qtr) 2.43 -82.13
EBT Margin % EBT Margin % (Qtr) -1.84 -47.07
Gross Margin % Gross Margin % (Qtr) 22.30 50.48
Net Profit Margin % Net Margin % (Qtr) -2.60 -48.61