Analyzing Strategic Education (NASDAQ:STRA) and KinderCare Learning Companies (NYSE:KLC)

KinderCare Learning Companies (NYSE:KLC) and Strategic Education (NASDAQ:STRA) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Institutional and Insider Ownership

93.3% of Strategic Education shares are owned by institutional investors. 5.8% of KinderCare Learning Companies shares are owned by insiders. Comparatively, 3.6% of Strategic Education shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares KinderCare Learning Companies and Strategic Education”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KinderCare Learning Companies	$2.73 billion	0.07	-$112.88 million	($3.98)	-0.41
Strategic Education	$1.27 billion	1.39	$126.61 million	$6.00	13.26

Strategic Education has lower revenue, but higher earnings than KinderCare Learning Companies. KinderCare Learning Companies is trading at a lower price-to-earnings ratio than Strategic Education, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and price targets for KinderCare Learning Companies and Strategic Education, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KinderCare Learning Companies	5	5	1	0	1.64
Strategic Education	0	3	2	0	2.40

KinderCare Learning Companies presently has a consensus target price of $3.77, indicating a potential upside of 129.27%. Strategic Education has a consensus target price of $96.67, indicating a potential upside of 21.52%. Given KinderCare Learning Companies’ higher probable upside, analysts clearly believe KinderCare Learning Companies is more favorable than Strategic Education.

Risk and Volatility

KinderCare Learning Companies has a beta of 3.86, suggesting that its stock price is 286% more volatile than the S&P 500. Comparatively, Strategic Education has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500.

Profitability

This table compares KinderCare Learning Companies and Strategic Education’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KinderCare Learning Companies	-17.23%	6.65%	1.21%
Strategic Education	10.46%	8.98%	7.11%

Summary

Strategic Education beats KinderCare Learning Companies on 10 of the 14 factors compared between the two stocks.

About KinderCare Learning Companies

KinderCare Learning Companies Inc. is a provider of high-quality early childhood education by center capacity. KinderCare Learning Companies Inc. is based in PORTLAND, Ore.

About Strategic Education

Strategic Education, Inc., through its subsidiaries, provides education services through campus-based and online post-secondary education, and programs to develop job-ready skills. The company operates through U.S. Higher Education, Australia/New Zealand, and Education Technology Services segments. It operates Strayer University that offers undergraduate and graduate degree programs in business, criminal justice, education, health services, information technology, and public administration at physical campuses located in the eastern United States, as well as through online; non-degree web and mobile application development courses through Hackbright Academy and Devmountain; and MBA online through its Jack Welch Management Institute. In addition, the company operates Capella University that provides post-secondary education; Torrens University, which offers undergraduate, graduate, higher degree by research, and specialized degree courses primarily in business, design and creative technology, health, hospitality, and education fields through online and on physical campuses located in Australia; Think Education, a vocational training organization; and Media Design School, which provides industry-endorsed courses in 3D animation and visual effects, game art and programming, graphic and motion design, digital media artificial intelligence, and creative advertising in New Zealand. It also offers Workforce Edge, a platform to employers that provides education benefits administration solutions; and Sophia Learning, which enables lower cost education benefits programs. Strategic Education, Inc. was founded in 1892 and is headquartered in Herndon, Virginia.