Evolve Education Group (NZSE:EVO) - Share price, News & Analysis

Q: What is the Fair Price of EVO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

EVO (NZ$0.67) is trading below our estimate of [[fair value]] (NZ$0.79)

EVO fundamental analysis
Snowflake Score
Valuation	1/6
Future Growth	4/6
Past Performance	1/6
Financial Health	3/6
Dividends	0/6

EVO Stock Overview

Evolve Education Group Limited provides early childhood education (ECE) services in New Zealand and Australia.

Rewards

Trading at 15% below our estimate of its fair value

Earnings are forecast to grow 45.9% per year

Risk Analysis

Volatile share price over the past 3 months

Large one-off items impacting financial results

Profit margins (0.5%) are lower than last year (7.4%)

Does not have a meaningful market cap (NZ$107M)

Evolve Education Group Competitors

Millennium & Copthorne Hotels New Zealand

NZSE:MCK

NZ$340.7m

Sunlands Technology Group

NYSE:STG

US$70.9m

Visang Education

KOSE:A100220

₩79.8b

JLSLtd

KOSDAQ:A040420

₩113.5b

Price History & Performance

Summary of all time highs, changes and price drops for Evolve Education Group
Historical stock prices
Current Share Price	NZ$0.67
52 Week High	NZ$0.96
52 Week Low	NZ$0.60
Beta	2.15
1 Month Change	3.08%
3 Month Change	-9.46%
1 Year Change	4.69%
3 Year Change	-20.24%
5 Year Change	-88.53%
Change since IPO	-92.25%

Recent News & Updates

Jul 20

Calculating The Intrinsic Value Of Evolve Education Group Limited (NZSE:EVO)

How far off is Evolve Education Group Limited ( NZSE:EVO ) from its intrinsic value? Using the most recent financial...

Shareholder Returns

	EVO	NZ Consumer Services	NZ Market
7D	-1.5%	1.9%	0.7%
1Y	4.7%	-1.7%	-11.3%

Return vs Industry: EVO exceeded the NZ Consumer Services industry which returned -1.7% over the past year.

Return vs Market: EVO exceeded the NZ Market which returned -11.3% over the past year.

Price Volatility

Is EVO's price volatile compared to industry and market?
EVO volatility
EVO Average Weekly Movement	7.4%
Consumer Services Industry Average Movement	7.6%
Market Average Movement	4.3%
10% most volatile stocks in NZ Market	8.3%
10% least volatile stocks in NZ Market	2.9%

Stable Share Price: EVO is more volatile than 75% of NZ stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: EVO's weekly volatility (7%) has been stable over the past year, but is still higher than 75% of NZ stocks.

About the Company

Founded	Employees	CEO	Website
2014	1,942	Chris Scott	https://www.evolveeducation.co.nz

Evolve Education Group Limited provides early childhood education (ECE) services in New Zealand and Australia. The company operates and manages ECE centers. It operates 109 ECE centers in New Zealand and 23 ECE centers in Australia under the Lollipops, Active Explorers, Learning Adventures, Little Earth Montessori, Little Lights, Little Wonders, and Pascals brand names.

Evolve Education Group Fundamentals Summary

How do Evolve Education Group's earnings and revenue compare to its market cap?
EVO fundamental statistics
Market Cap	NZ$106.90m
Earnings (TTM)	NZ$741.00k
Revenue (TTM)	NZ$157.96m

144.4x

P/E Ratio

0.7x

P/S Ratio

Is EVO overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
EVO income statement (TTM)
Revenue	NZ$157.96m
Cost of Revenue	NZ$17.79m
Gross Profit	NZ$140.17m
Other Expenses	NZ$139.43m
Earnings	NZ$741.00k

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.0046
Gross Margin	88.74%
Net Profit Margin	0.47%
Debt/Equity Ratio	27.5%

How did EVO perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is EVO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for EVO?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for EVO. This is calculated by dividing EVO's market cap by their current preferred multiple.
What is EVO's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	NZ$106.90m

EVO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2x
Enterprise Value/EBITDA	12.5x
PEG Ratio	3.1x

Price to Earnings Ratio vs Peers

How does EVO's PE Ratio compare to its peers?

EVO PE Ratio vs Peers

The above table shows the PE ratio for EVO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	15.8x
MCK Millennium & Copthorne Hotels New Zealand	14x	n/a	NZ$340.7m
STG Sunlands Technology Group	0.9x	n/a	US$70.9m
A100220 Visang Education	40.3x	n/a	₩79.8b
A040420 JLSLtd	8x	8.0%	₩113.5b
EVO Evolve Education Group	144.4x	45.9%	NZ$106.9m

Price-To-Earnings vs Peers: EVO is expensive based on its Price-To-Earnings Ratio (144.4x) compared to the peer average (15.8x).

Price to Earnings Ratio vs Industry

How does EVO's PE Ratio compare vs other companies in the Global Consumer Services Industry?

Price-To-Earnings vs Industry: EVO is expensive based on its Price-To-Earnings Ratio (144.4x) compared to the Oceanic Consumer Services industry average (30.6x)

Price to Earnings Ratio vs Fair Ratio

What is EVO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

EVO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	144.4x
Fair PE Ratio	17.8x

Price-To-Earnings vs Fair Ratio: EVO is expensive based on its Price-To-Earnings Ratio (144.4x) compared to the estimated Fair Price-To-Earnings Ratio (17.8x).

Share Price vs Fair Value

What is the Fair Price of EVO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: EVO (NZ$0.67) is trading below our estimate of fair value (NZ$0.79)

Significantly Below Fair Value: EVO is trading below fair value, but not by a significant amount.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.

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Future Growth

How is Evolve Education Group forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

45.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: EVO's forecast earnings growth (45.9% per year) is above the savings rate (2.1%).

Earnings vs Market: EVO's earnings (45.9% per year) are forecast to grow faster than the NZ market (5.1% per year).

High Growth Earnings: EVO's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: EVO's revenue (10.6% per year) is forecast to grow faster than the NZ market (6.3% per year).

High Growth Revenue: EVO's revenue (10.6% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: EVO's Return on Equity is forecast to be low in 3 years time (10%).

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Past Performance

How has Evolve Education Group performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-26.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: EVO has a large one-off loss of NZ$1.0M impacting its December 31 2021 financial results.

Growing Profit Margin: EVO's current net profit margins (0.5%) are lower than last year (7.4%).

Past Earnings Growth Analysis

Earnings Trend: EVO has become profitable over the past 5 years, growing earnings by -26.6% per year.

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

Earnings vs Industry: EVO had negative earnings growth (-92.7%) over the past year, making it difficult to compare to the Consumer Services industry average (-2.9%).

Return on Equity

High ROE: EVO's Return on Equity (0.6%) is considered low.

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Financial Health

How is Evolve Education Group's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: EVO's short term assets (NZ$53.7M) exceed its short term liabilities (NZ$42.3M).

Long Term Liabilities: EVO's short term assets (NZ$53.7M) do not cover its long term liabilities (NZ$250.8M).

Debt to Equity History and Analysis

Debt Level: EVO has more cash than its total debt.

Reducing Debt: EVO's debt to equity ratio has increased from 12% to 27.5% over the past 5 years.

Debt Coverage: EVO's debt is well covered by operating cash flow (107.4%).

Interest Coverage: EVO's interest payments on its debt are not well covered by EBIT (1.1x coverage).

Balance Sheet

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Dividend

What is Evolve Education Group current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

4.48%

Forecast Dividend Yield

Dividend Yield vs Market

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

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

Stability and Growth of Payments

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

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

Earnings Payout to Shareholders

Earnings Coverage: EVO is not paying a notable dividend for the NZ market.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as EVO has not reported any payouts.

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Management

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

3.3yrs

Average management tenure

CEO

Chris Scott (74 yo)

3yrs

Tenure

NZ$80,000

Compensation

Mr. Christopher John Scott, also known as Chris, B.Econ (Hons), has been Managing Director of Evolve Education Group Limited since August 16, 2019. Mr. Scott served as an Executive Director of G8 Education...

Leadership Team

Experienced Management: EVO's management team is considered experienced (3.3 years average tenure).

Board Members

Experienced Board: EVO's board of directors are considered experienced (3.1 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/08/18 00:00
End of Day Share Price	2022/08/18 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31