Kip McGrath Education Centres Limited (KME) AI Stock Analysis

• Market Cap: AU$32.44M
• Dividend Yield: 0.88%
• Average Volume (3M): 123.66K
• Price to Earnings (P/E): 16.1
• Beta (1Y): 0.03
• Revenue Growth: 11.73%
• EPS Growth: 66.51%
• Country: AU
• Employees: 25
• Sector: Consumer Cyclical
• Sector Strength: 60
• Industry: Education & Training Services
• EPS (TTM): 0.01
• Shares Outstanding: 56,907,190
• 10 Day Avg. Volume: 149,368
• 30 Day Avg. Volume: 123,655
• PEG Ratio: -6.92
• Price to Book (P/B): 1.16
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.58
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

• Rating: 72 Outperform
• 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 Business Overview & Revenue Model

Company Description

Kip 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 Money

Kip 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

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

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

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	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	32.71M	32.22M	26.65M	24.63M	19.24M	17.09M
Gross Profit	16.12M	10.54M	10.18M	9.67M	8.09M	7.61M
EBITDA	5.58M	6.61M	6.79M	6.21M	5.12M	5.21M
Net Income	2.00M	1.32M	1.92M	1.88M	1.73M	1.57M
Balance Sheet
Total Assets	35.42M	34.88M	37.11M	36.38M	30.73M	29.42M
Cash, Cash Equivalents and Short-Term Investments	5.73M	5.40M	9.15M	7.63M	10.57M	12.18M
Total Debt	3.26M	3.69M	3.63M	3.15M	2.21M	3.27M
Total Liabilities	10.87M	11.18M	14.03M	14.45M	12.27M	11.57M
Stockholders Equity	24.55M	23.70M	23.08M	21.92M	18.46M	17.85M
Cash Flow
Free Cash Flow	4.58M	-1.57M	2.81M	277.00K	1.37M	25.00K
Operating Cash Flow	5.11M	2.86M	6.37M	5.05M	6.16M	3.32M
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	-2.63M	4.75M

Kip McGrath Education Centres Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 0.57
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KME	72 Outperform	AU$32.44M	16.15	8.55%	0.88%	11.73%	66.51%
EDU	64 Neutral	AU$52.69M	22.01	22.69%	―	98.84%	―
Sector *	61 Neutral	AU$2.83B	27.14	4.84%	5.11%	2.60%	-31.70%
NXD	58 Neutral	AU$33.32M	―	-85.37%	―	-15.88%	-1426.12%
CLU	45 Neutral	AU$24.05M	―	-98.41%	―	-26.46%	56.78%
3PL	45 Neutral	AU$177.39M	―	-28.12%	―	-0.33%	-671.76%
AKG	45 Neutral	AU$12.73M	―	-17.65%	―	-0.14%	67.13%

Kip McGrath Education Centres Limited Corporate Events

Kip McGrath Exits USA Operations Amid Financial Restructuring

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

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

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

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

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

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.