NasdaqGM:REDU

Stock Analysis Report

Executive Summary

RISE Education Cayman Ltd, through its subsidiaries, provides junior English language training services under the RISE brand name in the People's Republic of China.

Rewards

Trading at 66.8% below its fair value

Revenue is forecast to grow 13.7% per year

Became profitable this year

Risk Analysis

Has a high level of debt



Snowflake Analysis

Proven track record and fair value.

Share Price & News

How has RISE Education Cayman's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: REDU has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.6%

REDU

1.7%

US Consumer Services

0.5%

US Market


1 Year Return

-36.0%

REDU

34.2%

US Consumer Services

20.3%

US Market

Return vs Industry: REDU underperformed the US Consumer Services industry which returned 34.2% over the past year.

Return vs Market: REDU underperformed the US Market which returned 20.3% over the past year.


Shareholder returns

REDUIndustryMarket
7 Day-1.6%1.7%0.5%
30 Day-11.5%5.8%2.0%
90 Day-11.8%21.0%9.4%
1 Year-36.0%-36.0%34.5%34.2%22.8%20.3%
3 Yearn/a124.1%113.6%50.1%40.4%
5 Yearn/a198.1%164.0%73.1%54.1%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is RISE Education Cayman 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: REDU ($6.25) is trading below our estimate of fair value ($18.83)

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


Price To Earnings Ratio

PE vs Industry: REDU is good value based on its PE Ratio (19.5x) compared to the Consumer Services industry average (25.5x).

PE vs Market: REDU is poor value based on its PE Ratio (19.5x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

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


Price to Book Ratio

PB vs Industry: REDU is overvalued based on its PB Ratio (4.5x) compared to the US Consumer Services industry average (2.2x).


Next Steps

Future Growth

How is RISE Education Cayman forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

13.7%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if REDU's forecast earnings growth is above the savings rate (1.7%).

Earnings vs Market: Insufficient data to determine if REDU's earnings are forecast to grow faster than the US market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: REDU's revenue (13.7% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: REDU's revenue (13.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: REDU's Return on Equity is forecast to be high in 3 years time (24%)


Next Steps

Past Performance

How has RISE Education Cayman performed over the past 5 years?

42.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: REDU has high quality earnings.

Growing Profit Margin: REDU became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: REDU's earnings have grown significantly by 42.2% per year over the past 5 years.

Accelerating Growth: REDU has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: REDU has become profitable in the last year, making it difficult to compare its past year earnings growth to the Consumer Services industry (14.8%).


Return on Equity

High ROE: REDU's Return on Equity (23%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is RISE Education Cayman's financial position?


Financial Position Analysis

Short Term Liabilities: REDU's short term assets (CN¥1.1B) do not cover its short term liabilities (CN¥1.3B).

Long Term Liabilities: REDU's short term assets (CN¥1.1B) exceed its long term liabilities (CN¥1.0B).


Debt to Equity History and Analysis

Debt Level: REDU's debt to equity ratio (91.7%) is considered high.

Reducing Debt: Insufficient data to determine if REDU's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: REDU's debt is well covered by operating cash flow (73.7%).

Interest Coverage: REDU's interest payments on its debt are well covered by EBIT (13.4x coverage).


Balance Sheet

Inventory Level: REDU has a high level of physical assets or inventory.

Debt Coverage by Assets: REDU's debt is covered by short term assets (assets are 2.2x debt).


Next Steps

Dividend

What is RISE Education Cayman's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.4%forecastin3Years0%

Current dividend yield vs market & industry

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

High Dividend: Unable to evaluate REDU'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 REDU's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if REDU'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 REDU's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

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

1.1yrs

Average management tenure


CEO

Lihong Wang (51yo)

0.08yrs

Tenure

0

Ms. Lihong Wang serves as Chief Executive Officer at RISE Education Cayman Ltd since January, 2020. Ms. Wang has been Non-Executive Director of Huifu Payment Limited since November 1, 2019. She serves as a ...


Leadership Team

NamePositionTenureCompensationOwnership
Lihong Wang
CEO & Chairwoman0.08yrsno datano data
Jiandong Lu
CFO, COO & Director2.3yrsno datano data
Li Mei
Senior IR Director0yrsno datano data
Xue Yuan
Senior Vice President of Academics12.3yrsno datano data

1.1yrs

Average Tenure

50yo

Average Age

Experienced Management: REDU's management team is not considered experienced ( 1.1 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Lihong Wang
CEO & Chairwoman0.08yrsno datano data
Jiandong Lu
CFO, COO & Director2.3yrsno datano data
Jia Zhu
Director0.08yrsno datano data
Yiding Sun
Vice Chairman0.08yrsno data1.16% CN¥4.1m
Weili Hong
Independent Director1.4yrsno datano data
Zhongjue Chen
Director6.3yrsno datano data
Yong Chen
Independent Director2.3yrsno datano data
Haiping Yan
Independent Director1.4yrsno datano data
Jun Yan
Independent Director1.4yrsno datano data

1.4yrs

Average Tenure

51yo

Average Age

Experienced Board: REDU's board of directors are not considered experienced ( 1.4 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: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

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


Top Shareholders

Company Information

RISE Education Cayman Ltd's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: RISE Education Cayman Ltd
  • Ticker: REDU
  • Exchange: NasdaqGM
  • Founded: 2007
  • Industry: Education Services
  • Sector: Consumer Services
  • Market Cap: US$354.840m
  • Shares outstanding: 56.77m
  • Website: https://www.risecenter.com

Number of Employees


Location

  • RISE Education Cayman Ltd
  • Jia He Guo Xin Mansion
  • Room 101
  • Beijing
  • 100062
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
REDUNasdaqGM (Nasdaq Global Market)YesSPONSORED ADRUSUSDOct 2017
6REBST (Boerse-Stuttgart)YesSPONSORED ADRDEEUROct 2017

Biography

RISE Education Cayman Ltd, through its subsidiaries, provides junior English language training services under the RISE brand name in the People's Republic of China. The company offers a range of educational programs, services, and products, including educational courses, sale of course materials, franchise services, and study tours. It also provides educational consulting services. As of December 31, 2018, the company had a network of 380 learning centers comprising 76 self-owned centers and 304 franchised learning centers. RISE Education Cayman Ltd was founded in 2007 and is headquartered in Beijing, the People's Republic of China. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/20 02:23
End of Day Share Price2020/02/19 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


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.