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Kip McGrath Education Centres Limited (AU:KME)
:KME
Australian Market

Kip McGrath Education Centres Limited (KME) AI Stock Analysis

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AU

Kip McGrath Education Centres Limited

(Sydney:KME)

Rating:72Outperform
Price Target:
AU$0.50
▼(-12.28%Downside)
The overall stock score reflects strong financial performance, particularly in revenue growth and balance sheet stability, though tempered by concerns about declining profit margins and negative free cash flow. Technical analysis indicates potential short-term price correction due to overbought conditions, while valuation metrics are reasonable. The absence of earnings call data and corporate events does not impact the score.

Kip McGrath Education Centres Limited (KME) vs. iShares MSCI Australia ETF (EWA)

Kip McGrath Education Centres Limited Business Overview & Revenue Model

Company DescriptionKip McGrath Education Centres Limited (KME) is a global education company that specializes in providing personalized tutoring services for students of all ages. With a focus on core subjects such as mathematics and English, KME operates through a network of franchised and company-owned centers worldwide. The company aims to improve student learning outcomes by offering tailored educational programs designed to meet individual learning needs.
How the Company Makes MoneyKip McGrath Education Centres Limited makes money primarily through its franchise model, where franchisees pay fees to operate under the Kip McGrath brand. Revenue is generated from initial franchise fees as well as ongoing royalty payments, which are typically a percentage of the franchisee's revenue. Additionally, KME offers its own company-owned centers, contributing direct revenue from tutoring services. The company may also earn income from the sale of educational materials and resources. Partnerships with schools and other educational institutions can also supplement their revenue by expanding their reach and client base.

Kip McGrath Education Centres Limited Financial Statement Overview

Summary
Kip McGrath Education Centres Limited exhibits strong revenue growth and a stable balance sheet with low leverage, which provides a solid foundation for future growth. However, declining profit margins and negative free cash flow raise concerns about operational efficiency and cash management.
Income Statement
82
Very Positive
The company showed strong revenue growth with a 20.9% increase from the previous year. However, gross profit margin decreased slightly from 38.2% to 32.7%, indicating rising costs or pricing pressures. Net profit margin decreased from 7.2% to 4.1%, suggesting challenges in cost control. EBIT and EBITDA margins also declined, reflecting reduced operational efficiency.
Balance Sheet
85
Very Positive
Kip McGrath maintains a solid financial position with a debt-to-equity ratio of 0.16, indicating low leverage risk. The equity ratio improved to 68.0%, showing strong equity financing. Despite these strengths, return on equity decreased to 5.6%, suggesting lower profitability from equity investments.
Cash Flow
78
Positive
The company experienced a negative free cash flow growth, dropping from 2.8 million in 2023 to negative 1.6 million in 2024, reflecting increased capital expenditures. Operating cash flow to net income ratio was positive at 2.17, indicating good cash generation relative to net income, but free cash flow to net income was negative, highlighting cash flow volatility.
BreakdownTTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income Statement
Total Revenue32.71M32.22M26.65M24.63M19.24M17.09M
Gross Profit16.12M10.54M10.18M9.67M8.09M7.61M
EBITDA5.58M6.61M6.79M6.21M5.12M5.21M
Net Income2.00M1.32M1.92M1.88M1.73M1.57M
Balance Sheet
Total Assets35.42M34.88M37.11M36.38M30.73M29.42M
Cash, Cash Equivalents and Short-Term Investments5.73M5.40M9.15M7.63M10.57M12.18M
Total Debt3.26M3.69M3.63M3.15M2.21M3.27M
Total Liabilities10.87M11.18M14.03M14.45M12.27M11.57M
Stockholders Equity24.55M23.70M23.08M21.92M18.46M17.85M
Cash Flow
Free Cash Flow4.58M-1.57M2.81M277.00K1.37M25.00K
Operating Cash Flow5.11M2.86M6.37M5.05M6.16M3.32M
Investing Cash Flow-2.64M-4.44M-3.57M-6.96M-4.79M-3.30M
Financing Cash Flow-3.17M-2.18M-1.28M-1.04M-2.63M4.75M

Kip McGrath Education Centres Limited Technical Analysis

Technical Analysis Sentiment
Positive
Last Price0.57
Price Trends
50DMA
0.44
Positive
100DMA
0.44
Positive
200DMA
0.44
Positive
Market Momentum
MACD
0.04
Negative
RSI
75.70
Negative
STOCH
92.91
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:KME, the sentiment is Positive. The current price of 0.57 is above the 20-day moving average (MA) of 0.47, above the 50-day MA of 0.44, and above the 200-day MA of 0.44, indicating a bullish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 75.70 is Negative, neither overbought nor oversold. The STOCH value of 92.91 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:KME.

Kip McGrath Education Centres Limited Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
AUKME
72
Outperform
AU$32.44M16.158.55%0.88%11.73%66.51%
AUEDU
64
Neutral
AU$52.69M22.0122.69%98.84%
61
Neutral
AU$2.83B27.144.84%5.11%2.60%-31.70%
AUNXD
58
Neutral
AU$33.32M-85.37%-15.88%-1426.12%
AUCLU
45
Neutral
AU$24.05M-98.41%-26.46%56.78%
AU3PL
45
Neutral
AU$177.39M-28.12%-0.33%-671.76%
AUAKG
45
Neutral
AU$12.73M-17.65%-0.14%67.13%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AU:KME
Kip McGrath Education Centres Limited
0.57
0.26
83.87%
AU:EDU
EDU Holdings Limited
0.35
0.26
288.89%
AU:NXD
iCollege Ltd.
0.16
0.00
0.00%
AU:AKG
Academies Australasia Group Limited
0.10
-0.07
-41.18%
AU:CLU
Cluey Ltd
0.07
0.04
133.33%
AU:3PL
3P Learning Ltd.
0.65
-0.35
-35.00%

Kip McGrath Education Centres Limited Corporate Events

Kip McGrath Exits USA Operations Amid Financial Restructuring
Jun 24, 2025

Kip McGrath Education Centres Limited has announced its decision to cease funding and exit its USA operations, including the closure of its Frisco tutoring center, due to unsustainable business models and operating losses. This move will result in the USA operations being reported as a discontinued business, with associated costs and asset write-offs impacting the company’s financials. Despite these challenges, Kip McGrath anticipates an increase in underlying revenue and EBITDA for FY25, excluding the USA operations, and is reviewing its capital management strategy.

Kip McGrath Appoints New CEO to Drive Growth
Jun 16, 2025

Kip McGrath Education Centres Limited has appointed Melinda Smith as its new CEO and Managing Director, effective in the second half of 2025. Melinda Smith brings extensive leadership experience from her previous roles at Goodstart Early Learning, the Australian Taxation Office, and Woolworths Limited. Her appointment is seen as a strategic move to drive the company’s growth as it approaches its 50th anniversary in 2026, with a focus on expanding its global tutoring services.

Kip McGrath Education Centres Updates Registered Office Address
Jun 4, 2025

Kip McGrath Education Centres Limited has announced a change in its registered office and postal address, now located at Suite 2.02, Level 2, 31 Market Street, Sydney, NSW 2000, with the postal address at PO BOX Q694, Queen Victoria Building, NSW 1230. This change is effective immediately and has been authorized by the Board of Directors, while the company’s website and telephone numbers remain unchanged.

Leadership Change at Kip McGrath Education Centres
May 9, 2025

Kip McGrath Education Centres Limited announced that Storm McGrath has ceased to be a director as of May 5, 2025. This change in leadership could impact the company’s strategic direction and stakeholder relations, as McGrath held significant direct and indirect interests in the company’s securities.

Kip McGrath Announces CEO Transition
May 5, 2025

Kip McGrath Education Centres Limited announced the end of Mr. Storm McGrath’s tenure as CEO and Managing Director after nineteen years. To ensure continuity, Non-Executive Chair Damian Banks will take on the role of Executive Chair during the transition period as the company searches for a new CEO, expected to be appointed later in 2025.

Kip McGrath Education Centres Cancels 60,000 Performance Rights
Apr 15, 2025

Kip McGrath Education Centres Limited announced the cessation of 60,000 performance rights, which were canceled by mutual agreement between the entity and the holder. This move may impact the company’s capital structure and could reflect strategic adjustments in its financial or operational strategies.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 26, 2025