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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:70Outperform
Price Target:
AU$0.50
▲(25.00%Upside)
The most significant factor contributing to Kip McGrath Education Centres Limited's score is its solid financial performance, highlighted by strong revenue growth and a stable balance sheet. However, concerns about declining profit margins and negative free cash flow are notable risks. Technical analysis indicates a bearish trend, which may affect short-term stock performance. Valuation metrics suggest the stock might be undervalued, offering a potential opportunity for long-term investors.

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 offers English and Maths education services in Australia, New Zealand, the United Kingdom, and internationally. The company also provides tutorial assistance in English and Maths to primary and secondary students; and online tutoring services. It also has a franchise network. The company operates a network of approximately 560 tutoring centers. Kip McGrath Education Centres Limited was founded in 1976 and is headquartered in Newcastle, Australia.
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. The company should focus on improving cost controls and optimizing capital expenditures to enhance profitability and cash flow stability.
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.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
32.71M32.22M26.65M24.63M19.24M17.09M
Gross Profit
16.12M10.54M10.18M9.67M8.09M7.61M
EBIT
7.59M1.75M2.51M2.46M1.95M2.16M
EBITDA
5.58M6.61M6.79M6.21M5.12M5.21M
Net Income Common Stockholders
2.00M1.32M1.92M1.88M1.73M1.57M
Balance SheetCash, Cash Equivalents and Short-Term Investments
5.73M5.40M9.15M7.63M10.57M12.18M
Total Assets
35.42M34.88M37.11M36.38M30.73M29.42M
Total Debt
3.26M3.69M3.63M3.15M2.21M3.27M
Net Debt
-2.47M-1.71M-5.52M-4.48M-8.36M-8.91M
Total Liabilities
10.87M11.18M14.03M14.45M12.27M11.57M
Stockholders Equity
24.55M23.70M23.08M21.92M18.46M17.85M
Cash FlowFree Cash Flow
4.58M-1.57M2.81M277.00K1.37M25.00K
Operating Cash Flow
5.11M2.86M6.37M5.05M6.16M3.32M
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
Negative
Last Price0.40
Price Trends
50DMA
0.42
Negative
100DMA
0.43
Negative
200DMA
0.44
Negative
Market Momentum
MACD
>-0.01
Positive
RSI
41.32
Neutral
STOCH
-13.10
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:KME, the sentiment is Negative. The current price of 0.4 is below the 20-day moving average (MA) of 0.41, below the 50-day MA of 0.42, and below the 200-day MA of 0.44, indicating a bearish trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 41.32 is Neutral, neither overbought nor oversold. The STOCH value of -13.10 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:KME.

Kip McGrath Education Centres Limited Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
AUKME
70
Outperform
AU$21.91M10.918.55%1.26%11.73%66.51%
62
Neutral
$6.84B11.412.80%3.87%2.70%-24.58%
DEH1J
DE6MM
€87.72M-71.41%5.44%
DE03F
€570.53M9.9816.90%5.28%
AUGEM
66
Neutral
AU$967.36M14.267.43%4.60%3.24%21.10%
AUAKG
52
Neutral
AU$17.90M-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
0.40
0.09
29.03%
DE:H1J
Janison Education Group Ltd.
DE:6MM
Southern Cross Media Group Limited
0.33
-0.09
-21.43%
DE:03F
IDP Education Ltd.
2.20
-6.66
-75.17%
AU:AKG
Academies Australasia Group Limited
0.14
-0.04
-22.22%
AU:GEM
G8 Education Limited
1.20
0.07
6.19%

Kip McGrath Education Centres Limited Corporate Events

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.

Kip McGrath Announces CFO Transition
Apr 1, 2025

Kip McGrath Education Centres Limited has announced a change in its executive team, with Brett Edwards stepping down as Chief Financial Officer effective April 11, 2025. Roxana Lupou, the current Global Financial Controller, will serve as Interim CFO, bringing over 20 years of financial leadership experience to the role. This transition may impact the company’s operations and market positioning as they begin the search for a permanent CFO.

Kip McGrath Director Increases Stake Through DRP
Mar 31, 2025

Kip McGrath Education Centres Limited announced a change in the director’s interest, with Storm McGrath acquiring additional shares through a Dividend Reinvestment Plan. This change in shareholding reflects the director’s increased stake in the company, potentially signaling confidence in the company’s future performance and stability, which may positively impact stakeholder perceptions.

Kip McGrath Education Centres Lists New Securities on ASX
Mar 27, 2025

Kip McGrath Education Centres Limited has announced the quotation of 64,671 fully paid ordinary securities on the Australian Securities Exchange (ASX). This move is part of the company’s strategy to enhance its financial standing and potentially expand its market presence, impacting its operations and stakeholders positively.

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.