NYSE:LRN

Stock Analysis Report

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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.


Snowflake Analysis

Excellent balance sheet and fair value.


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: LRN's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0.9%

LRN

3.5%

US Consumer Services

3.0%

US Market


1 Year Return

-22.2%

LRN

9.1%

US Consumer Services

9.9%

US Market

Return vs Industry: LRN underperformed the US Consumer Services industry which returned 8.4% over the past year.

Return vs Market: LRN underperformed the US Market which returned 9.5% over the past year.


Shareholder returns

LRNIndustryMarket
7 Day0.9%3.5%3.0%
30 Day7.2%6.0%8.2%
90 Day21.1%-9.4%0.4%
1 Year-22.2%-22.2%9.5%9.1%12.4%9.9%
3 Year30.3%30.3%59.8%53.7%31.0%22.3%
5 Year80.2%80.2%153.6%124.1%58.1%40.3%

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

Valuation

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

46.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LRN ($24.62) is trading below our estimate of fair value ($46.5)

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


Price To Earnings Ratio

PE vs Industry: LRN is poor value based on its PE Ratio (42.2x) compared to the Consumer Services industry average (21.6x).

PE vs Market: LRN is poor value based on its PE Ratio (42.2x) compared to the US market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: LRN is poor value based on its PEG Ratio (1.2x)


Price to Book Ratio

PB vs Industry: LRN is good value based on its PB Ratio (1.5x) compared to the US Consumer Services industry average (2.2x).


Next Steps

Future Growth

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

34.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LRN's forecast earnings growth (34% per year) is above the savings rate (2.2%).

Earnings vs Market: LRN's earnings (34% per year) are forecast to grow faster than the US market (22% per year).

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

Revenue vs Market: LRN's revenue (6.8% per year) is forecast to grow slower than the US market (8.8% per year).

High Growth Revenue: LRN's revenue (6.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LRN's Return on Equity is forecast to be low in 3 years time (5.5%).


Next Steps

Past Performance

How has K12 performed over the past 5 years?

32.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LRN has high quality earnings.

Growing Profit Margin: LRN's current net profit margins (2.2%) are lower than last year (4.3%).


Past Earnings Growth Analysis

Earnings Trend: LRN's earnings have grown significantly by 32.6% per year over the past 5 years.

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

Earnings vs Industry: LRN had negative earnings growth (-46.9%) over the past year, making it difficult to compare to the Consumer Services industry average (15.4%).


Return on Equity

High ROE: LRN's Return on Equity (3.5%) is considered low.


Next Steps

Financial Health

How is K12's financial position?


Financial Position Analysis

Short Term Liabilities: LRN's short term assets ($486.7M) exceed its short term liabilities ($257.6M).

Long Term Liabilities: LRN's short term assets ($486.7M) exceed its long term liabilities ($113.8M).


Debt to Equity History and Analysis

Debt Level: LRN's debt to equity ratio (15%) is considered satisfactory.

Reducing Debt: LRN's debt to equity ratio has increased from 0.3% to 15% over the past 5 years.

Debt Coverage: LRN's debt is well covered by operating cash flow (71.3%).

Interest Coverage: LRN earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet


Next Steps

Dividend

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


Dividend Yield vs Market

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

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

Growing Dividend: Insufficient data to determine if LRN'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 LRN'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?

1.8yrs

Average management tenure


CEO

Nate Davis (65yo)

2.25yrs

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 ($USD9.79M) is above average for companies of similar size in the US market ($USD3.20M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Nathaniel Davis
CEO & Executive Chairman2.25yrsUS$9.79m1.58% $15.3m
James Rhyu
President of Corporate Strategyno dataUS$4.68m0.72% $7.0m
Vincent Mathis
Executive VP1.75yrsUS$3.99m0.10% $999.8k
Shaun McAlmont
President of Career Readiness Education1.75yrsUS$5.19m0.14% $1.4m
Kevin Chavous
President of Academics2.58yrsUS$4.33m0.17% $1.6m
Timothy Medina
Chief Financial Officer0.17yrno data0.088% $854.5k
Rob Banwarth
Chief Information Officer & Senior VP5.25yrsno datano data
Jeff Kwitowski
Senior Vice President of Corporate Communicationsno datano datano data
Mike Kraft
Senior Vice President of Corporate Communications1.42yrsno datano data
Todd Goldthwaite
Senior VP & Chief Marketing Officer1.42yrsno datano data

1.8yrs

Average Tenure

54yo

Average Age

Experienced Management: LRN's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Nathaniel Davis
CEO & Executive Chairman2.25yrsUS$9.79m1.58% $15.3m
Guillermo Bron
Independent Director12.92yrsUS$200.00k0.14% $1.3m
Robert Knowling
Independent Director2.42yrsUS$195.00k0.015% $148.8k
Steven Fink
Independent Director16.67yrsUS$225.00k0.38% $3.7m
Craig Barrett
Lead Independent Director2.75yrsUS$190.00k0.14% $1.4m
Mary Futrell
Member of Educational Advisory Committeeno dataUS$30.00kno data
John Engler
Independent Director7.67yrsUS$205.00k0.13% $1.3m
Aida Alvarez
Independent Director1.5yrsUS$195.00k0.038% $371.3k
David Driscoll
Member of Education Advisory Committeeno datano datano data
Eliza McFadden
Independent Director2.83yrsUS$195.00k0.022% $209.9k

5.3yrs

Average Tenure

68yo

Average Age

Experienced Board: LRN's board of directors are considered experienced (5.2 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: LRN 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

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


Key Information

  • Name: K12 Inc.
  • Ticker: LRN
  • Exchange: NYSE
  • Founded: 2000
  • Industry: Education Services
  • Sector: Consumer Services
  • Market Cap: US$970.550m
  • Shares outstanding: 39.42m
  • 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 primarily in kindergarten through 12th grade in the United States and internationally. It also offers full-time programs virtual and blended public schools; full-time virtual programs, semester courses, and supplemental educational products; and teacher training, teaching, and other academic and technology support services to public schools, school districts, private schools, charter schools, early childhood learning centers, and corporate partners. In addition, the company provides FuelEd suite of offerings, such as K12 curriculum, FuelEd online courses, and FuelEd anywhere learning systems; Middlebury Interactive Languages; Stride; and the Big Universe literacy solutions. Further, it operates online private schools, including K12 International Academy, The Keystone School, and the George Washington University Online High School. Additionally, the company offers access to the online lessons and curriculum through proprietary learning management system; learning kits and guides; student computers; and administrative, accreditation, compliance and tracking, financial management, and human resources support services, as well as facility, operations, and technology support services. It also provides academic support services comprising teachers and related, advanced and special education, and student support services, as well as supports academically at-risk learners. The company sells individual K-8 online courses and supplemental educational products directly to families. K12 Inc. was founded in 2000 and is headquartered in Herndon, Virginia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/06/01 11:18
End of Day Share Price2020/05/29 00:00
Earnings2020/03/31
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.