Legacy Education Inc. (NYSE: LGCY)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001836754
Market Cap 152.57 Mn
P/B 3.31
P/E 18.44
P/S 2.03
ROIC (Qtr) 12.73
Div Yield % 0.00
Rev 1y % (Qtr) 40.70
Total Debt (Qtr) 15.66 Mn
Debt/Equity (Qtr) 0.34
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About

Investment thesis

Bull case

  • Healthy cash reserves of 21.06M provide 7.88x coverage of short-term debt 2.67M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 62.42M provides 3.99x coverage of total debt 15.66M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 6.04M provides exceptional 56.30x coverage of interest expenses 107206, showing strong debt service capability.
  • Tangible assets of 62.42M provide exceptional 11.82x coverage of deferred revenue 5.28M, showing strong service capability backing.
  • Robust free cash flow of 4.83M exceeds capital expenditure of 1.21M by 4.01x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 6.04M barely covers its investment activities of (1.21M), with a coverage ratio of -5.01, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 6.04M provides insufficient coverage of deferred revenue obligations of 5.28M, which is 1.14x, raising concerns about future service delivery capabilities.
  • Operating cash flow of 6.04M provides minimal 1.60x coverage of tax expenses of 3.77M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of 4.83M represents just -4.45x of debt issuance (1.09M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Tax assets of 395546 provide limited offset against tax liabilities of 2.22M, which is 0.18x, indicating potential future cash flow pressure from tax obligations.

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 2.03 0.71
EV to Cash from Ops. EV/CFO 24.58 6.80
EV to Debt EV to Debt 9.47 11.15
EV to EBIT EV/EBIT 12.21 112.78
EV to EBITDA EV/EBITDA 12.94 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 30.72 5.57
EV to Market Cap EV to Market Cap 0.97 582,173.64
EV to Revenue EV/Rev 1.98 1.74
Price to Book Value [P/B] P/B 3.31 -3.80
Price to Earnings [P/E] P/E 18.44 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 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) 113.33 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -139.65 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 24.82 25.11
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 31.93 -39.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 45.87 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) 40.46 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) 41.05 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) 6.45 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) 133.91 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 52.26 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.03 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 1.50 0.73
Current Ratio Curr Ratio (Qtr) 2.98 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.34 3.83
Interest Cover Ratio Int Coverage (Qtr) 113.33 53.05
Times Interest Earned Times Interest Earned (Qtr) 113.33 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 16.90 -30.62
EBIT Margin % EBIT Margin % (Qtr) 16.17 -82.13
EBT Margin % EBT Margin % (Qtr) 16.03 -47.07
Gross Margin % Gross Margin % (Qtr) 46.50 50.48
Net Profit Margin % Net Margin % (Qtr) 11.00 -48.61