ASX:KME

Stock Analysis Report

Kip McGrath Education Centres

Executive Summary

Kip McGrath Education Centres Limited provides supplementary English and math education services in Australia, New Zealand, the United Kingdom, Europe, and internationally.


Snowflake Analysis

Excellent balance sheet second-rate dividend payer.

Share Price & News

How has Kip McGrath Education Centres's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: KME's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

18.8%

KME

14.8%

AU Consumer Services

2.8%

AU Market


1 Year Return

11.0%

KME

-26.4%

AU Consumer Services

-16.2%

AU Market

Return vs Industry: KME exceeded the Australian Consumer Services industry which returned -25.6% over the past year.

Return vs Market: KME exceeded the Australian Market which returned -19.2% over the past year.


Shareholder returns

KMEIndustryMarket
7 Day18.8%14.8%2.8%
30 Day8.6%-24.1%-15.2%
90 Day-19.2%-26.8%-23.4%
1 Year15.8%11.0%-24.2%-26.4%-12.4%-16.2%
3 Year264.7%215.6%-8.7%-17.9%-0.2%-13.9%
5 Year177.5%119.6%-42.7%-53.0%11.5%-13.6%

Price Volatility Vs. Market

How volatile is Kip McGrath Education Centres's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Kip McGrath Education Centres undervalued compared to its fair value and its price relative to the market?

17.8x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: KME (A$1) is trading above our estimate of fair value (A$0.92)

Significantly Below Fair Value: KME is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: KME is poor value based on its PE Ratio (17.6x) compared to the Consumer Services industry average (12.5x).

PE vs Market: KME is poor value based on its PE Ratio (17.6x) compared to the Australian market (13x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate KME's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: KME is overvalued based on its PB Ratio (3.8x) compared to the AU Consumer Services industry average (1.2x).


Next Steps

Future Growth

How is Kip McGrath Education Centres forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

20.6%

Forecasted Consumer Services industry annual growth in earnings


In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as Kip McGrath Education Centres has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.


Next Steps

Past Performance

How has Kip McGrath Education Centres performed over the past 5 years?

23.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: KME has a high level of non-cash earnings.

Growing Profit Margin: KME's current net profit margins (14.4%) are lower than last year (18.3%).


Past Earnings Growth Analysis

Earnings Trend: KME's earnings have grown significantly by 23.2% per year over the past 5 years.

Accelerating Growth: KME's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: KME had negative earnings growth (-1.1%) over the past year, making it difficult to compare to the Consumer Services industry average (-1.1%).


Return on Equity

High ROE: KME's Return on Equity (21.7%) is considered high.


Next Steps

Financial Health

How is Kip McGrath Education Centres's financial position?


Financial Position Analysis

Short Term Liabilities: KME's short term assets (A$6.1M) do not cover its short term liabilities (A$8.0M).

Long Term Liabilities: KME's short term assets (A$6.1M) exceed its long term liabilities (A$3.1M).


Debt to Equity History and Analysis

Debt Level: KME's debt to equity ratio (11.3%) is considered satisfactory.

Reducing Debt: KME's debt to equity ratio has reduced from 19.3% to 11.3% over the past 5 years.

Debt Coverage: KME's debt is well covered by operating cash flow (324%).

Interest Coverage: KME's interest payments on its debt are well covered by EBIT (36.9x coverage).


Balance Sheet


Next Steps

Dividend

What is Kip McGrath Education Centres's current dividend yield, its reliability and sustainability?

3.96%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: KME's dividend (4%) is higher than the bottom 25% of dividend payers in the Australian market (3.17%).

High Dividend: KME's dividend (4%) is low compared to the top 25% of dividend payers in the Australian market (8.1%).


Stability and Growth of Payments

Stable Dividend: KME's dividend payments have been volatile in the past 10 years.

Growing Dividend: KME's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (70.5%), KME's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.9yrs

Average board tenure


CEO

Storm McGrath (49yo)

13.25s

Tenure

AU$461,431

Compensation

Mr. Storm McGrath, MBA, has been the Chief Executive Officer of Kip McGrath Education Centres Ltd. since 2007 and served as its Joint Managing Director, Managing Director and Joint Chief Executive Officer. ...


CEO Compensation Analysis

Compensation vs Market: Storm's total compensation ($USD277.29K) is about average for companies of similar size in the Australian market ($USD238.58K).

Compensation vs Earnings: Storm's compensation has been consistent with company performance over the past year.


Board Members

NamePositionTenureCompensationOwnership
Storm McGrath
CEO & Director13.25yrsAU$461.43k6.97% A$3.2m
Ian Campbell
Non-Executive Chairman0.67yrAU$88.03kno data
Trevor Folsom
Non-Executive Director5.58yrsAU$78.04k0.14% A$66.3k
Diane Pass
Non-Executive Director3.17yrsAU$78.04k0.12% A$56.1k

1.9yrs

Average Tenure

Experienced Board: KME's board of directors are not considered experienced ( 1.9 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: KME insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Kip McGrath Education Centres Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Kip McGrath Education Centres Limited
  • Ticker: KME
  • Exchange: ASX
  • Founded: 1974
  • Industry: Education Services
  • Sector: Consumer Services
  • Market Cap: AU$46.139m
  • Shares outstanding: 45.23m
  • Website: https://www.kipmcgrath.com

Location

  • Kip McGrath Education Centres Limited
  • 6 Newcomen Street
  • Level 3
  • Newcastle
  • New South Wales
  • 2300
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
KMEASX (Australian Securities Exchange)YesOrdinary SharesAUAUDAug 2003
KMECHIA (Chi-X Australia)YesOrdinary SharesAUAUDAug 2003

Biography

Kip McGrath Education Centres Limited provides supplementary English and math education services in Australia, New Zealand, the United Kingdom, Europe, and internationally. It sells franchises and offers services to franchisees in the education field. The company also provides tutorial assistance in English and math to primary and secondary students; and online tutoring services. It has a franchise network of approximately 560 tutoring centers. Kip McGrath Education Centres Limited was founded in 1974 and is headquartered in Newcastle, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/07 10:35
End of Day Share Price2020/04/07 00:00
Earnings2019/12/31
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.