Franklin Covey Company (FC) AI Stock Analysis

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Franklin Covey Company

(NYSE:FC)

Rating:60Neutral

Price Target:―

Franklin Covey's overall stock score of 60 reflects its strong financial foundation and efficient management, which are tempered by recent revenue fluctuations and free cash flow volatility. The technical analysis indicates bearish momentum, and the recent earnings call highlights challenges in government and international revenues. While the valuation is reasonable, these factors collectively suggest a cautious outlook, with potential for long-term stability but short-term uncertainties.

Positive Factors

Growth Strategy

The strategic growth investments are viewed as an appropriate trade-off for accelerated growth and profitability.

Performance Expectation

The OUTPERFORM rating is maintained, with a recommendation to take advantage of current weakness for potential future growth.

Valuation

Franklin Covey's shares are trading at a discount to its Ed Tech peer group, suggesting potential value for investors.

Negative Factors

Earnings Guidance

Initial FY/25 earnings guidance below expectations due to planned investments in strategic growth initiatives.

Financial Performance

Revenue in the second quarter decreased 2.8% to $59.6 million, below estimates and consensus.

Government Contracts

Full-year guidance was reduced to reflect government contract terminations and uncertain business conditions.

Franklin Covey Company (FC) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$297.03M

Dividend YieldN/A

Average Volume (3M)95.33K

Price to Earnings (P/E)17.2

Beta (1Y)1.00

Revenue Growth2.53%

EPS Growth5.95%

CountryUS

Employees1,084

SectorIndustrials

Sector Strength93

IndustryConsulting Services

Share Statistics

EPS (TTM)-0.08

Shares Outstanding12,987,725

10 Day Avg. Volume88,784

30 Day Avg. Volume95,329

Financial Highlights & Ratios

PEG Ratio-0.30

Price to Book (P/B)3.81

Price to Sales (P/S)0.00

P/FCF Ratio8.11

Enterprise Value/Market Cap0.80

Enterprise Value/Revenue0.21

Enterprise Value/Gross Profit1.09

Enterprise Value/Ebitda1.49

Forecast

1Y Price Target

$45.00

Price Target Upside96.76% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

Franklin Covey Company Business Overview & Revenue Model

Company DescriptionFranklin Covey Co. provides training and consulting services in the areas of execution, sales performance, productivity, customer loyalty, and educational improvement for organizations and individuals worldwide. The company operates through three segments: Direct Offices, International Licensees, and Education Practice. It also provides a suite of individual-effectiveness and leadership-development training and products. The company was incorporated in 1983 and is headquartered in Salt Lake City, Utah.

How the Company Makes MoneyFranklin Covey Company makes money primarily through the sale of its training and consulting services, as well as through the licensing of its content and intellectual property. The company generates revenue by offering workshops, seminars, and digital learning solutions to organizations across various industries. Key revenue streams include corporate training programs, public workshops, and online courses. Franklin Covey also partners with educational institutions and other organizations to expand its reach and impact, which contributes to its earnings. The company's ability to customize its solutions to meet specific client needs is a significant factor in its revenue generation.

Franklin Covey Company Financial Statement Overview

Summary

Franklin Covey Company presents a solid financial position with stable revenue growth, strong profitability margins, and a healthy balance sheet characterized by low leverage. The company efficiently manages its resources, maintaining positive cash flows. Potential risks include recent fluctuations in revenue and free cash flow, which necessitates careful monitoring. The company's financial health appears strong, supporting future growth and stability.

Income Statement

Positive

Franklin Covey Company demonstrates a stable financial performance with consistent revenue growth from 2021 to 2025. The Gross Profit Margin remains strong, averaging around 75%, while the Net Profit Margin shows improvement, reaching 6.2% in TTM. However, there is a slight decline in total revenue in the latest TTM period, indicating a potential risk if this trend continues.

Balance Sheet

Positive

The company's balance sheet is robust with a low Debt-to-Equity Ratio of 0.02 in TTM, indicating low leverage. The Equity Ratio is healthy at 32.8%, showcasing a stable financial structure. Return on Equity has improved, reflecting efficient management of shareholder funds despite a decrease in stockholders' equity.

Cash Flow

Positive

The cash flow statement reveals strong operational cash generation with a healthy Operating Cash Flow to Net Income Ratio. Free Cash Flow has shown volatility, decreasing in the most recent TTM period, which may impact financial flexibility. The consistent operating cash flow is a positive indicator of the company's ability to sustain operations.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
286.19M	287.23M	280.52M	262.84M	224.17M	198.46M
	Gross Profit
218.35M	221.07M	213.49M	201.91M	172.90M	145.37M
	EBIT
26.99M	33.04M	26.36M	23.67M	8.10M	4.69M
	EBITDA
34.53M	43.08M	39.98M	38.17M	23.82M	18.66M
	Net Income Common Stockholders
17.78M	23.40M	17.78M	18.43M	13.62M	-9.44M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
40.90M	48.66M	38.23M	60.52M	47.42M	27.14M
	Total Assets
221.93M	261.54M	245.92M	259.15M	249.65M	205.44M
	Total Debt
11.14M	6.03M	15.33M	24.26M	32.86M	36.65M
	Net Debt
-29.76M	-42.63M	-22.90M	-36.25M	-14.56M	9.51M
	Total Liabilities
151.11M	178.40M	167.26M	176.34M	169.79M	145.98M
	Stockholders Equity
70.83M	83.14M	78.65M	82.81M	79.86M	59.45M
Cash Flow		Free Cash Flow
33.78M	56.56M	22.19M	46.92M	42.07M	18.30M
	Operating Cash Flow
42.82M	60.26M	35.74M	52.25M	46.18M	27.56M
	Investing Cash Flow
-10.80M	-11.31M	-13.55M	-5.33M	-14.31M	-11.87M
	Financing Cash Flow
-32.59M	-38.66M	-44.18M	-32.67M	-11.48M	-16.56M

Franklin Covey Company Technical Analysis

Technical Analysis Sentiment

Negative

Last Price22.87

Price Trends

50DMA

23.34

Negative

100DMA

28.82

Negative

200DMA

33.87

Negative

Market Momentum

MACD

0.17

Negative

RSI

52.01

Neutral

STOCH

51.13

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FC, the sentiment is Negative. The current price of 22.87 is above the 20-day moving average (MA) of 22.00, below the 50-day MA of 23.34, and below the 200-day MA of 33.87, indicating a neutral trend. The MACD of 0.17 indicates Negative momentum. The RSI at 52.01 is Neutral, neither overbought nor oversold. The STOCH value of 51.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FC.

Franklin Covey Company Risk Analysis

Franklin Covey Company disclosed 29 risk factors in its most recent earnings report. Franklin Covey Company reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 1 New Risks

Adverse resolution of litigation may harm our operating results or financial condition. Q4, 2024

Franklin Covey Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CRAI	75 Outperform	$1.26B	25.04	23.18%	0.98%	8.49%	21.06%
ICFI	73 Outperform	$1.57B	14.64	11.64%	0.66%	1.95%	17.98%
Sector *	65 Neutral	$4.41B	12.06	5.22%	249.80%	4.09%	-12.16%
FC	60 Neutral	$297.03M	17.23	24.81%	―	2.53%	5.95%
AERT	57 Neutral	$27.65M	0.39	112.00%	―	34.17%	―
FORR	54 Neutral	$203.02M	―	-45.64%	―	-9.61%	-18170.36%
RGP	49 Neutral	$163.36M	―	-31.18%	11.34%	-16.27%	-589.83%

* Industrials Sector Average

Performance Comparison

Franklin Covey Company

22.87

-14.13

-38.19%

CRAI

Cra International

185.46

16.30

9.64%

FORR

Forrester Research

10.65

-7.35

-40.83%

ICFI

Icf International

85.32

-54.82

-39.12%

RGP

Resources Connection

4.94

-5.68

-53.48%

AERT

Aeries Technology

0.62

-0.81

-56.64%

Franklin Covey Company Earnings Call Summary

Earnings Call Date:Apr 02, 2025

(Q2-2025)

% Change Since: -18.00%|

Next Earnings Date:Jun 25, 2025

Earnings Call Sentiment Neutral

The call reflects a mixed sentiment. While there are positive developments in new client acquisition and multi-year contract commitments, significant challenges from government revenue impacts and international market issues have led to a downward revision of guidance.

Q2-2025 Updates

Positive Updates

Strong Land and Expand Metrics

The company exceeded its new logo plan by more than 50% in the second quarter and expects 40% growth in new logo sales for the year. The average revenue per client expanded from $39,000 to more than $85,000.

Robust Multi-Year Contract Commitments

At the end of Q2, 61% of subscription revenue is under a multi-year contract, and additions to unbilled deferred revenue were up 10% year-over-year.

Education Business Growth

Education revenue grew 3% in the second quarter and is up 7% year-to-date. Year-to-date invoiced amounts in education are up 13%.

Negative Updates

Government Revenue Impact

Approximately $5 million in government revenue has been canceled or postponed due to federal spending cuts, with a total expected decline of $5 million this year compared to guidance.

International Revenue Decline

International revenues are expected to be down by as much as $4 million compared to the low end of guidance due to trade tensions and political factors.

Guidance Adjustment

Revenue guidance for the year has been adjusted to between $275 million and $285 million, down from $287.2 million last year, with adjusted EBITDA expected to be between $30 million and $33 million.

Company Guidance

During the Franklin Covey Second Quarter Earnings Conference Call, the company provided updated fiscal 2025 guidance, reflecting adjustments due to external factors. The firm now anticipates revenue to range between $275 million and $285 million, down from the $287.2 million achieved last year and $15 million lower than the low end of the original guidance in constant currency. Adjusted EBITDA is projected to be between $30 million and $33 million, down from last year’s $55.3 million, primarily due to $16 million in incremental growth investments and anticipated losses from government-related revenue disruptions. The company highlighted a $5 million reduction in government revenue and potential impacts of $4 million on international revenues, $3 million on education revenue, and $3 million from additional U.S. economic headwinds. Despite these challenges, Franklin Covey remains optimistic about its North American enterprise go-to-market transformation and education sector growth, with a positive outlook for achieving significant future growth in adjusted EBITDA and revenue.

Franklin Covey Company Corporate Events

Executive/Board Changes

Franklin Covey Announces New CFO and Leadership Changes

Neutral

Apr 21, 2025

On April 16, 2025, Franklin Covey Company announced changes in its executive financial leadership. Stephen D. Young will retire as Chief Financial Officer effective May 1, 2025, after 24 years of service, transitioning to a senior advisor role until August 31, 2025. Jessica Betjemann will succeed him as CFO, bringing over 30 years of financial experience, including her recent role as CFO of Gogo, Inc. Additionally, A. Derek Hatch will be appointed as Chief Accounting Officer, Controller, and Treasurer, effective the same date, continuing his long tenure with the company.

Business Operations and StrategyFinancial Disclosures

Franklin Covey Reports Q2 Fiscal 2025 Financial Results

Neutral

Apr 2, 2025

Franklin Covey Co. reported its financial results for the second quarter of fiscal 2025, which ended on February 28, 2025. The company experienced a decrease in consolidated revenue to $59.6 million from $61.3 million in the previous year, with the Enterprise Division facing challenges due to canceled government contracts and economic uncertainties. However, the Education Division saw a 3% increase in revenue. Despite a net loss of $1.1 million, Franklin Covey is optimistic about its new go-to-market and sales force strategy in North America, which has already shown positive results in client expansion and new logo acquisition.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.