KinderCare Learning Companies Inc (KLC) AI Stock Analysis

• Market Cap: $1.29B
• Dividend Yield: N/A
• Average Volume (3M): 942.47K
• Price to Earnings (P/E): 35.8
• Beta (1Y): 0.99
• Revenue Growth: 6.09%
• EPS Growth: -191.19%
• Country: US
• Employees: 43,690
• Sector: Consumer Defensive
• Sector Strength: 94
• Industry: Education & Training Services
• EPS (TTM): -0.82
• Shares Outstanding: 118,006,280
• 10 Day Avg. Volume: 1,170,206
• 30 Day Avg. Volume: 942,466
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.65
• Price to Cash Flow (P/CF): N/A
• P/FCF Ratio: 0.00
• 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: $24.00
• Price Target Upside: 117.79% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

KinderCare's score reflects a mixed financial performance, with strong revenue growth but challenges in profitability and financial stability. Technical indicators suggest bearish trends, and valuation is complicated by negative earnings. Positive sentiment from the earnings call offers some optimism, but flat occupancy and low tuition increase guidance are concerns.

Positive Factors

Industry Positioning

KLC's position as the largest daycare provider in the US is viewed as valuable in an attractive industry.

Revenue Growth

KLC reported 4.7% revenue growth, which was in-line with Cons and ahead of MSe by 70bps.

Stock Valuation

Valuation appears attractive at approximately 10.7x '25 EV/EBITDA, providing a potential 43% upside to the price target.

Negative Factors

Government Subsidy Exposure

There is some uncertainty due to large government subsidy exposure following recent election results.

Guidance

KinderCare's earnings release lacked further guidance for the fourth quarter or fiscal year 2025, which disappointed investors.

KinderCare Learning Companies Inc Business Overview & Revenue Model

Company Description

KinderCare Learning Companies, Inc. provides early childhood education and care services in the United States. The company offers infant, toddler, preschool, kindergarten, and before- and after-school programs in various categories comprising community-based and employer-sponsored early childhood education and care, and before- and after-school educational services. As of October 2, 2021, it served children ranging from 6 weeks to 12 years of age through 1,490 early childhood education centers with a licensed capacity of 195,000 and contracts for approximately 650 before-and after-school sites in 40 states and the District of Columbia. The company was founded in 1969 and is based in Portland, Oregon.

How the Company Makes Money

KinderCare Learning Companies Inc makes money primarily through tuition and fees charged to parents for the enrollment of their children in its educational programs. These programs include full-time care, part-time care, and before-and-after school care, tailored to meet the needs of working families. The company also generates revenue from government subsidies and assistance programs that support families in need of child care services. Additionally, KinderCare may engage in partnerships with corporations to provide on-site child care services as part of employee benefits, further contributing to its revenue streams.

KinderCare Learning Companies Inc Financial Statement Overview

Summary

KinderCare Learning Companies Inc demonstrates strong revenue growth but faces challenges with profitability and financial stability. High leverage and negative net income are risks, while negative free cash flow suggests cash management issues. Improvement in operational efficiency and financial health is needed to enhance shareholder value and sustain growth.

Income Statement

KinderCare Learning Companies Inc shows a mixed performance in its income statement. Despite a consistent increase in total revenue over the years, the company has recently reported a negative net income, indicating net losses. The gross profit margin is strong, suggesting effective cost management in producing services. However, the EBIT and net profit margins have declined, showing challenges in maintaining operational efficiency and profitability. The revenue growth rate is positive, which is a promising sign for the company’s sales trajectory.

Balance Sheet

The balance sheet of KinderCare Learning Companies Inc reflects a high debt-to-equity ratio, indicating significant leverage that could pose financial risks if not managed properly. The equity ratio is moderate, showing a balanced but slightly weaker equity position compared to total assets. Return on equity has been declining, impacting shareholder value. Overall, the balance sheet highlights a need for better financial management to improve equity and reduce leverage.

Cash Flow

Cash flow analysis reveals a concerning trend of negative free cash flow, primarily due to higher capital expenditures than operating cash flow in recent periods. While operating cash flow remains positive, the ratio to net income indicates inefficiencies. The company needs to focus on improving free cash flow sustainability to support long-term operations and growth.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.66B	2.51B	2.17B	1.81B	1.37B
	Gross Profit
630.52M	685.86M	741.20M	506.20M	214.49M
	EBIT
79.32M	275.29M	389.47M	212.40M	-30.80M
	EBITDA
209.91M	391.86M	477.73M	295.36M	18.48M
	Net Income Common Stockholders
-92.84M	102.56M	219.17M	88.41M	-129.50M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
62.34M	156.15M	105.21M	177.25M	53.23M
	Total Assets
3.65B	3.65B	3.66B	3.47B	3.27B
	Total Debt
1.47B	2.69B	1.36B	1.40B	2.85B
	Net Debt
1.41B	2.54B	1.26B	1.22B	2.80B
	Total Liabilities
2.78B	3.15B	3.26B	3.21B	3.13B
	Stockholders Equity
864.51M	506.88M	407.69M	255.61M	136.28M
Cash Flow		Free Cash Flow
-16.43M	174.50M	202.18M	116.40M	-34.60M
	Operating Cash Flow
115.89M	303.54M	341.61M	183.29M	13.59M
	Investing Cash Flow
-147.24M	-117.66M	-299.73M	-80.15M	-48.48M
	Financing Cash Flow
-62.63M	-134.94M	-117.66M	20.87M	47.77M

KinderCare Learning Companies Inc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATGE	82 Outperform	$3.83B	19.34	14.63%	―	12.83%	97.16%
LRN	79 Outperform	$5.82B	22.54	22.95%	―	13.13%	56.75%
PRDO	78 Outperform	$1.70B	11.74	16.39%	1.94%	-4.05%	1.50%
UTI	72 Outperform	$1.46B	27.53	21.41%	―	14.70%	275.89%
STRA	68 Neutral	$1.94B	16.85	6.80%	3.08%	7.68%	61.28%
Sector *	63 Neutral	$20.53B	14.04	-16.01%	3.27%	1.30%	4.55%
KLC	55 Neutral	$1.29B	35.79	-13.54%	―	6.09%	-191.19%