DB:3KA

Stock Analysis Report

Executive Summary

K12 Inc., a technology-based education company, together with its subsidiaries, provides online curriculum, software systems, and educational services to facilitate individualized learning for students primarily in kindergarten through 12th grade in the United States and internationally.

Rewards

Trading at 63% below its fair value

Earnings are forecast to grow 10.25% per year

Earnings have grown 22.3% per year over the past 5 years

Risk Analysis

Highly volatile share price over past 3 months



Snowflake Analysis

Flawless balance sheet with proven track record.


Similar Companies

Share Price & News

How has K12's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

4.2%

3KA

0.9%

DE Consumer Services

1.0%

DE Market


1 Year Return

-12.5%

3KA

13.5%

DE Consumer Services

15.7%

DE Market

Return vs Industry: 3KA underperformed the German Consumer Services industry which returned 13.5% over the past year.

Return vs Market: 3KA underperformed the German Market which returned 15.7% over the past year.


Shareholder returns

3KAIndustryMarket
7 Day4.2%0.9%1.0%
30 Day-2.2%-1.0%1.0%
90 Day-34.7%2.3%6.7%
1 Year-12.5%-12.5%15.4%13.5%19.3%15.7%
3 Year10.1%10.1%6.7%0.9%19.5%8.9%
5 Year79.2%79.2%-43.5%-58.7%36.9%18.3%

Price Volatility Vs. Market

How volatile is K12's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is K12 undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 3KA (€17.5) is trading below our estimate of fair value (€47.31)

Significantly Below Fair Value: 3KA is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 3KA is poor value based on its PE Ratio (21.6x) compared to the Consumer Services industry average (13.8x).

PE vs Market: 3KA is poor value based on its PE Ratio (21.6x) compared to the German market (20.5x).


Price to Earnings Growth Ratio

PEG Ratio: 3KA is poor value based on its PEG Ratio (2.1x)


Price to Book Ratio

PB vs Industry: 3KA is good value based on its PB Ratio (1.2x) compared to the XE Consumer Services industry average (2.3x).


Next Steps

Future Growth

How is K12 forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

10.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 3KA's forecast earnings growth (10.2% per year) is above the savings rate (-0.4%).

Earnings vs Market: 3KA's earnings (10.2% per year) are forecast to grow slower than the German market (13.3% per year).

High Growth Earnings: 3KA's earnings are forecast to grow, but not significantly.

Revenue vs Market: 3KA's revenue (4.1% per year) is forecast to grow slower than the German market (4.9% per year).

High Growth Revenue: 3KA's revenue (4.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if 3KA's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has K12 performed over the past 5 years?

22.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 3KA has high quality earnings.

Growing Profit Margin: 3KA's current net profit margins (3.5%) are higher than last year (2.9%).


Past Earnings Growth Analysis

Earnings Trend: 3KA's earnings have grown significantly by 22.3% per year over the past 5 years.

Accelerating Growth: 3KA's earnings growth over the past year (30.5%) exceeds its 5-year average (22.3% per year).

Earnings vs Industry: 3KA earnings growth over the past year (30.5%) underperformed the Consumer Services industry 52.7%.


Return on Equity

High ROE: 3KA's Return on Equity (5.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is K12's financial position?


Financial Position Analysis

Short Term Liabilities: 3KA's short term assets ($498.3M) exceed its short term liabilities ($139.7M).

Long Term Liabilities: 3KA's short term assets ($498.3M) exceed its long term liabilities ($49.1M).


Debt to Equity History and Analysis

Debt Level: 3KA is debt free.

Reducing Debt: 3KA had no debt 5 years ago.

Debt Coverage: 3KA has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: 3KA has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 3KA has a low level of unsold assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if 3KA's debt is covered by short term assets.


Next Steps

Dividend

What is K12's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.3%markettop25%3.6%industryaverage1.9%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate 3KA's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate 3KA's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 3KA's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 3KA's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 3KA's dividend in 3 years as they are not forecast to pay a notable one for the German market.


Next Steps

Management

What is the CEO of K12's salary, the management and board of directors tenure and is there insider trading?

1.9yrs

Average management tenure


CEO

Nate Davis (65yo)

1.8yrs

Tenure

US$9,785,697

Compensation

Mr. Nathaniel Alonzo Davis, also known as Nate, is Executive Chairman at K12, Inc. since January 2013 and is its Chief Executive Officer since March 2018. Mr. Davis is Managing Director and Board Manager a ...


CEO Compensation Analysis

Compensation vs Market: Nate's total compensation ($USD9.79M) is above average for companies of similar size in the German market ($USD1.28M).

Compensation vs Earnings: Nate's compensation has increased by more than 20% in the past year.


Management Age and Tenure

1.9yrs

Average Tenure

55yo

Average Age

Experienced Management: 3KA's management team is not considered experienced ( 1.9 years average tenure), which suggests a new team.


Board Age and Tenure

7.2yrs

Average Tenure

67.5yo

Average Age

Experienced Board: 3KA's board of directors are considered experienced (7.2 years average tenure).


Insider Trading

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


Recent Insider Transactions

Sell€277,84529 Oct 19
Kevin Chavous
EntityIndividual
Role
Unit President
President of Academics
Shares15,000
Max Price€18.52
Sell€109,44111 Feb 19
Kevin Chavous
EntityIndividual
Role
Unit President
President of Academics
Shares4,000
Max Price€27.36
Sell€2,547,10929 Jan 19
Nathaniel Davis
EntityIndividual
Role
Chief Executive Officer
CEO & Executive Chairman
Shares100,000
Max Price€25.47

Ownership Breakdown

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


Management Team

  • Nate Davis (65yo)

    CEO & Executive Chairman

    • Tenure: 1.8yrs
    • Compensation: US$9.79m
  • Vincent Mathis (55yo)

    • Tenure: 1.3yrs
    • Compensation: US$3.99m
  • Jeff Kwitowski

    Senior Vice President of Corporate Communications

    • Tenure: 0yrs
  • Shaun McAlmont (53yo)

    President of Career Readiness Education

    • Tenure: 1.3yrs
    • Compensation: US$5.19m
  • James Rhyu (49yo)

    CFO and President of Product & Technology

    • Tenure: 6.5yrs
    • Compensation: US$4.68m
  • Val Maddy

    Senior Vice President of Human Resources

    • Tenure: 6.8yrs
  • Mike Kraft

    Senior Vice President of Corporate Communications

    • Tenure: 0yrs
  • Rob Banwarth

    Chief Information Officer & Senior VP

    • Tenure: 4.8yrs
  • Kevin Chavous (63yo)

    President of Academics

    • Tenure: 2.1yrs
    • Compensation: US$4.33m
  • Todd Goldthwaite

    Senior VP & Chief Marketing Officer

    • Tenure: 0.9yrs

Board Members

  • Nate Davis (65yo)

    CEO & Executive Chairman

    • Tenure: 1.8yrs
    • Compensation: US$9.79m
  • Bill Bron (67yo)

    Independent Director

    • Tenure: 12.4yrs
    • Compensation: US$200.00k
  • Bob Knowling (64yo)

    Independent Director

    • Tenure: 1.9yrs
    • Compensation: US$195.00k
  • Steve Fink (68yo)

    Independent Director

    • Tenure: 16.2yrs
    • Compensation: US$225.00k
  • Craig Barrett (80yo)

    Lead Independent Director

    • Tenure: 2.3yrs
    • Compensation: US$190.00k
  • Mary Futrell (79yo)

    Member of Educational Advisory Committee

    • Tenure: 0yrs
    • Compensation: US$30.00k
  • John Engler (70yo)

    Independent Director

    • Tenure: 7.2yrs
    • Compensation: US$205.00k
  • David Driscoll

    Member of Education Advisory Committee

    • Tenure: 0yrs
  • Liza McFadden (56yo)

    Independent Director

    • Tenure: 2.3yrs
    • Compensation: US$195.00k
  • Elanna Yalow

    Member of Educational Advisory Committee

    • Tenure: 0yrs

Company Information

K12 Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: K12 Inc.
  • Ticker: 3KA
  • Exchange: DB
  • Founded: 2000
  • Industry: Education Services
  • Sector: Consumer Services
  • Market Cap: US$773.053m
  • Listing Market Cap: US$694.975m
  • Shares outstanding: 39.18m
  • Website: https://www.k12.com

Number of Employees


Location

  • K12 Inc.
  • 2300 Corporate Park Drive
  • Herndon
  • Virginia
  • 20171
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LRNNYSE (New York Stock Exchange)YesCommon StockUSUSDDec 2007
3KADB (Deutsche Boerse AG)YesCommon StockDEEURDec 2007

Biography

K12 Inc., a technology-based education company, together with its subsidiaries, provides online curriculum, software systems, and educational services to facilitate individualized learning for students pri ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/13 21:33
End of Day Share Price2019/12/13 00:00
Earnings2019/09/30
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.