Breaking Down Educational Development Corporation (EDUC) Financial Health: Key Insights for Investors

Are you an investor trying to understand the financial stability of Educational Development Corporation (EDUC)? What are the critical numbers that tell the story of their performance in fiscal year 2024? Did you know that the company's net revenues reached $51.0 million, compared to $87.8 million the previous year? And that, as of April 17, 2025, Educational Development's stock price is $1.33? Keep reading to discover key insights into EDUC's financial health and what it means for your investment decisions.

Educational Development Corporation (EDUC) Revenue Analysis

Understanding Educational Development Corporation's (EDUC) financial health begins with a detailed analysis of its revenue streams. A comprehensive breakdown can offer valuable insights for investors.

Key areas to consider include:

• Breakdown of primary revenue sources
• Year-over-year revenue growth rate
• Contribution of different business segments to overall revenue
• Analysis of any significant changes in revenue streams

For the fiscal year ended February 29, 2024, Educational Development Corporation (EDUC) reported net revenues of $51.0 million, compared to $87.8 million in the prior year. This represents a significant year-over-year decrease.

In the third quarter of fiscal year 2025, which ended November 30, 2024, EDUC reported net revenues of $11.1 million, a decrease from $16.9 million in the same quarter of the previous year.

EDUC's financial performance in 2024 reflects challenges such as high inflation impacting their target customers. The company is implementing strategies to generate positive cash flows and minimize operating losses during these times.

Relevant link: Mission Statement, Vision, & Core Values of Educational Development Corporation (EDUC).

Educational Development Corporation (EDUC) Profitability Metrics

Analyzing Educational Development Corporation's (EDUC) profitability involves examining its gross profit, operating profit, and net profit margins. These metrics provide insights into the company's efficiency in generating profit from its revenue. It's also important to compare these ratios with industry averages and to observe trends over time to assess the company's financial health and operational effectiveness. You might be interested in Exploring Educational Development Corporation (EDUC) Investor Profile: Who’s Buying and Why?

For the fiscal year ended February 29, 2024, EDUC reported:

• Net revenues of $51.0 million compared to $87.8 million in the prior year.
• Gross Profit was $32.98 million.

Here's a breakdown of EDUC's profitability metrics:

Gross Profit Margin:

The gross profit margin is a key indicator of a company's efficiency in managing its cost of goods sold (COGS) to generate revenue. It is calculated as (Revenue - COGS) / Revenue.

• For the fiscal year that ended in Feb. 2024, EDUC's Gross Margin was 64.64%.
• For the quarter that ended in Nov. 2024, the Gross Margin was 62.47%.

A higher gross profit margin indicates that a company is efficient in converting revenue into gross profit.

Operating Profit Margin:

Operating profit margin measures a company's profitability based on its core operations. It is calculated by dividing operating income (revenue minus operating expenses) by total revenue and multiplying by 100.

• In Q3 2024, EDUC had an operating loss of $1,111,900, compared to an operating income of $2,696,000 in the previous year.

Net Profit Margin:

Net profit margin measures the percentage of revenue that turns into profit after all expenses, including operating costs, interest, and taxes, have been deducted. It is calculated by dividing the net income (profit) by the total revenue and multiplying by 100.

• Net earnings totaled $0.5 million, an increase of $3.0 million for the year ended February 29, 2024.
• Earnings per share totaled $0.07, on a fully diluted basis for the year ended February 29, 2024.
• In Q3 2024, Net loss for the quarter was $835,700, compared to a net income of $1,972,100 in the previous year.

A high net profit margin suggests efficient operations, effective cost management, and strong pricing power.

Trends in Profitability Over Time:

EDUC's financial performance has shown some fluctuations in recent years.

• The 5-Year average Growth Rate of Gross Margin for Educational Development was -1.10% per year.
• For Q3 2025, Net revenues were $11.1 million compared to $16.9 million and Net earnings (loss) totaled $(0.8) million, compared to $2.0 million.

Analysis of Operational Efficiency:

Operational efficiency can be gleaned from cost management and gross margin trends. EDUC has been implementing cost-reduction initiatives to restore profitability.

• In July 2024, EDC leased approximately 50% of its occupied office and warehouse space, reducing their overall footprint and generating income.
• In August 2024, they switched their outbound freight carrier, which reduced the average cost per shipment by approximately 20%.
• In September 2024, they consolidated their warehouse operations in Utah into their Tulsa facility.

These measures indicate efforts to streamline operations and improve efficiency.

Educational Development Corporation (EDUC) Debt vs. Equity Structure

Understanding Educational Development Corporation's (EDUC) financial health requires a close examination of its debt and equity structure. This involves analyzing the levels of debt the company holds, how it compares to its equity, and how these factors influence its financial stability and growth prospects.

As of January 31, 2024, Educational Development Corporation (EDUC) reported the following debt figures:

• Total current liabilities: $22.44 million
• Total liabilities: $27.21 million

EDUC's debt-to-equity ratio provides insight into the company's financial leverage. A lower ratio generally indicates a more conservative financing approach. As of January 31, 2024, EDUC's total stockholders' equity was $41.26 million. The debt-to-equity ratio can be derived from the balance sheet data, offering a clearer picture of the company's financing strategy.

Recent financial activities, such as debt issuances or refinancing, can significantly impact EDUC's financial structure. For instance, the Paycheck Protection Program (PPP) loan forgiveness affected the company's financial statements. In fiscal year 2021, EDUC recognized $2.4 million of income from the forgiveness of the PPP loan. Such events can alter the company's debt profile and overall financial health.

EDUC strategically balances debt financing with equity funding to support its operations and growth. The specifics of this balance can be observed in their financial statements. For example, EDUC's assets and liabilities have seen changes, reflecting the company's financing and operational decisions. The company's total assets as of January 31, 2024, were $68.47 million.

For more detailed information on Educational Development Corporation's (EDUC) strategic direction, refer to Mission Statement, Vision, & Core Values of Educational Development Corporation (EDUC).

Educational Development Corporation (EDUC) Liquidity and Solvency

Analyzing Educational Development Corporation's (EDUC) financial health involves a detailed look at its liquidity and solvency, which are critical for investors. Liquidity refers to the company's ability to meet its short-term obligations, while solvency assesses its ability to meet long-term obligations.

Assessing Educational Development Corporation's Liquidity:

Current and Quick Ratios: These ratios provide insights into EDUC's ability to cover its short-term liabilities with its short-term assets. For the fiscal year 2024, EDUC's financial data offers the basis for calculating these ratios. A current ratio of greater than 1 indicates that EDUC has more current assets than current liabilities.

Analysis of Working Capital Trends: Monitoring EDUC's working capital, which is the difference between its current assets and current liabilities, is essential. A positive working capital balance indicates that EDUC has enough short-term assets to cover its short-term liabilities. Trends in working capital can reveal whether EDUC's liquidity position is improving or deteriorating.

Cash Flow Statements Overview: A review of EDUC's cash flow statements for the fiscal year 2024 is crucial for understanding its liquidity. Key areas to examine include:

• Operating Cash Flow: This indicates the cash EDUC generates from its core business operations. Positive and growing operating cash flow is a sign of healthy liquidity.
• Investing Cash Flow: This section shows cash used for investments in assets. Significant outflows in this area could impact EDUC's short-term liquidity.
• Financing Cash Flow: This reflects cash flow from debt, equity, and dividends. Monitoring this can reveal how EDUC is managing its capital structure and liquidity.

Potential Liquidity Concerns or Strengths: Based on the analysis of these factors, any potential liquidity concerns or strengths can be identified. For instance, a declining current ratio or negative operating cash flow could signal liquidity issues, while a strong current ratio and positive operating cash flow would indicate a solid liquidity position.

Here is a sample table illustrating how key liquidity ratios can be tracked over time:

Understanding EDUC's liquidity and solvency is crucial for assessing its overall financial health and investment potential. By analyzing key financial ratios, working capital trends, and cash flow statements, investors can gain valuable insights into EDUC's ability to meet its short-term and long-term obligations.

To further enhance your understanding of EDUC, consider exploring additional resources such as Exploring Educational Development Corporation (EDUC) Investor Profile: Who’s Buying and Why?.

Educational Development Corporation (EDUC) Valuation Analysis

Determining whether Educational Development Corporation (EDUC) is overvalued or undervalued requires a comprehensive look at various financial metrics. These include ratios like price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA), as well as stock price trends, dividend yield, payout ratios, and analyst consensus.

Key Valuation Ratios:

• Price-to-Earnings (P/E) Ratio: As of January 2025, EDUC's P/E ratio is reported as -1.8x. A negative P/E ratio suggests the company has negative earnings.
• Price-to-Book (P/B) Ratio: The P/B ratio is 0.26. A P/B ratio below 1 can indicate the stock is undervalued relative to its book value.
• Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA ratio is -11.39x. A negative EV/EBITDA ratio can occur if the company has negative EBITDA, which may signal financial distress or temporary losses.

Stock Price Trends:

EDUC's stock has experienced significant volatility. Recent data indicates:

• The stock reached a 52-week low, trading around $1.21 - $1.30 in March 2025.
• As of April 17, 2025, the stock price was around $1.26 - $1.33.
• The stock has shown a decrease of 43.70% over the last year.

Here's a look at EDUC's performance over various trailing periods:

Dividend Yield and Payout Ratios:

Educational Development Corporation has a history of dividend payments, but recent data shows:

• The last ex-dividend date was February 18, 2022, with a dividend of $0.10 per share.
• The company's dividend yield is currently 0%.

The company's last dividend payout was in 2022. Given the recent financial performance, it is important to monitor any updates regarding future dividend payouts.

Analyst Consensus:

As of April 2025, analyst ratings for Educational Development Corporation are limited. The available data suggests:

• A general lack of consensus, with ratings ranging from 'Very Bullish' to 'Very Bearish'.
• Technical analysis indicates a 'sell' signal.

Considering these factors, investors should carefully evaluate Educational Development Corporation's financial health, market conditions, and future growth potential before making investment decisions. See more about the company's values: Mission Statement, Vision, & Core Values of Educational Development Corporation (EDUC).

Educational Development Corporation (EDUC) Risk Factors

Several internal and external risk factors could significantly impact Educational Development Corporation's (EDUC) financial health. These risks span industry competition, regulatory changes, and overall market conditions. EDUC's small market capitalization of approximately $11.4 million as of April 2025, coupled with declining earnings, intensifies these vulnerabilities.

Here's a breakdown of key risks:

• Industry Competition: EDUC faces competition from other educational material providers, including Scholastic, Make Believe Ideas, Mentoring Minds, and Livanis Publications. The rise of digital learning platforms also intensifies competition, potentially eroding EDUC's market share.
• Financial Risks:
• Debt Burden: EDUC carries a significant debt load. As of November 2024, the company had $31.4 million in debt, offset by only $2.29 million in cash, resulting in net debt of approximately $29.1 million.
• Negative Earnings: EDUC has been struggling with profitability. In Q3 2024, the company reported a net loss of $800,000, a stark contrast to the $0.24 earnings per share (EPS) in the prior year. The trailing twelve month revenue is $36.5M.
• Cash Flow Issues: The company's operations have produced negative earnings before interest and tax (EBIT), with an EBIT loss of $7.2 million. This raises concerns about EDUC's ability to meet its financial obligations.
• Operational Risks:
• Sales Network Erosion: EDUC has experienced a decline in its sales network, with average active PaperPie Brand Partners decreasing from 16,400 to 12,400 in Q3 2024 compared to the previous year.
• Revenue Decline: Net revenues decreased from $16.9 million to $11.1 million in Q3 2024. Year-to-date net revenues also dropped from $42.1 million to $27.6 million.
• Strategic Risks:
• Reliance on Hilti Complex Sale: EDUC's strategy to repay its debts heavily relies on the sale of its Hilti Complex headquarters. Delays or failure to close the sale could lead to default, given the company's thin margins.
• Real Estate Contract Amendment: EDUC has been in discussions to amend the real estate contract for the sale of the Hilti Complex, including a 30-day extension to the due diligence period and a delay in the earnest money deposit, introducing uncertainty.

Here's a summary of EDUC's financial data based on available reports:

EDUC has been actively trying to mitigate these risks through several strategies:

• Cost Reduction Measures: Implementing cost-cutting measures and efficiency gains to restore profitability.
• Operational Consolidation: Consolidating warehouse operations to reduce costs.
• Debt Reduction: Reducing bank debt and payables to strengthen the balance sheet.
• Credit Agreement Amendments: Extending the maturity dates of its revolving loan and term loans to manage its debt obligations.

Despite these efforts, EDUC's financial health remains fragile. The company's success hinges on executing its asset sales and operational restructuring effectively. Investors should carefully weigh the short-term benefits against the long-term risks, considering EDUC's history of declining revenues and weak stock performance. As of April 2025, EDUC's stock is trading at 0.33x book value, reflecting investor skepticism about its turnaround potential. Furthermore, the company's valuation is reportedly 60% below its five-year average, signaling significant investor pessimism.

See more insights on EDUC's financial health: Breaking Down Educational Development Corporation (EDUC) Financial Health: Key Insights for Investors

Educational Development Corporation (EDUC) Growth Opportunities

Educational Development Corporation (EDUC) faces a dynamic landscape with both challenges and opportunities that shape its future growth trajectory. Understanding these elements is crucial for investors.

Key growth drivers for EDUC include:

• Product Innovations: Focusing on creating new and engaging products can drive consumer interest and sales.
• Market Expansions: Exploring new markets and distribution channels can significantly increase EDUC's reach.
• Acquisitions: Strategic acquisitions can broaden EDUC's product portfolio and market presence.

While specific future revenue growth projections and earnings estimates for EDUC are not readily available, several strategic initiatives and partnerships could influence its growth:

• Strategic Partnerships: Collaborations with educational institutions and other organizations can expand EDUC's market reach and credibility.
• Direct Sales Division: Usborne Books & More (UBAM), the direct selling division, relies on independent consultants to sell products through home parties, book fairs, and online.

EDUC's competitive advantages play a vital role in its growth prospects:

• Niche Market Focus: Specializing in the children’s educational market allows EDUC to tailor its products and marketing efforts effectively.
• Distribution Network: The combination of direct sales, retail partnerships, and online channels provides a diverse and robust distribution network.

For a deeper dive into EDUC's investor profile, you might find this resource helpful: Exploring Educational Development Corporation (EDUC) Investor Profile: Who’s Buying and Why?