Critical Survey: Bright Scholar Education Holdngs (BEDU) and K12 (LRN)

Bright Scholar Education Holdngs (NYSE: LRN) and K12 (NYSE:LRN) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares Bright Scholar Education Holdngs and K12’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bright Scholar Education Holdngs N/A N/A N/A
K12 3.01% 4.72% 3.67%

Institutional and Insider Ownership

13.2% of Bright Scholar Education Holdngs shares are owned by institutional investors. Comparatively, 82.7% of K12 shares are owned by institutional investors. 9.6% of K12 shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Bright Scholar Education Holdngs has a beta of 1.95, meaning that its share price is 95% more volatile than the S&P 500. Comparatively, K12 has a beta of -0.25, meaning that its share price is 125% less volatile than the S&P 500.

Valuation and Earnings

This table compares Bright Scholar Education Holdngs and K12’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bright Scholar Education Holdngs N/A N/A N/A N/A N/A
K12 $917.73 million 0.75 $27.62 million $0.68 25.69

K12 has higher revenue and earnings than Bright Scholar Education Holdngs.

Analyst Recommendations

This is a summary of current ratings for Bright Scholar Education Holdngs and K12, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bright Scholar Education Holdngs 0 0 3 0 3.00
K12 0 0 2 0 3.00

Bright Scholar Education Holdngs presently has a consensus target price of $17.00, suggesting a potential upside of 37.32%. K12 has a consensus target price of $20.50, suggesting a potential upside of 17.34%. Given Bright Scholar Education Holdngs’ higher possible upside, analysts clearly believe Bright Scholar Education Holdngs is more favorable than K12.

Summary

K12 beats Bright Scholar Education Holdngs on 6 of the 9 factors compared between the two stocks.

Bright Scholar Education Holdngs Company Profile

Bright Scholar Education Holdings Limited operates K-12 schools in China. Its schools comprise international schools, bilingual schools, and kindergartens. The company also offers a range of complementary education services, including international camps and after-school programs. As of January 23, 2018, it had a network of 60 schools with approximately 33,916 students. The company was founded in 1994 and is based in Foshan, China.

K12 Company Profile

K12 Inc., a technology-based education company, together with its subsidiaries, provides online curriculum, software systems, and educational services to facilitate individualized learning for students primarily in kindergarten through 12th grade in the United States and internationally. It manages virtual and blended public schools. The company also offers curriculum and technology solutions; full-time virtual and blended programs, semester courses, and supplemental educational products; teacher training, teaching, and other support services to public schools, school districts, private schools, charter schools, early childhood learning centers, and corporate partners. In addition, it provides FuelEd suite of offerings, such as K12 curriculum, FuelEd online courses, and FuelEd anywhere learning systems; and PEAK, a proprietary software system designed to manage in a single-user interface, multiple, and independent online school-based functions. Further, the company operates online private schools, including The K12 International Academy, the George Washington University Online High School, and the Keystone School. Additionally, it provides access to the online lessons and curriculum through proprietary learning management system; learning kits; student computers; and management, technology, and educational services. The company sells individual online courses directly to families who desire to educate their children outside of the traditional public school system or to supplement their child's existing public school education without the aid of an online teacher. K12 Inc. was founded in 2000 and is headquartered in Herndon, Virginia.

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