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Franklin Covey (FC)
:FC
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Franklin Covey Company
(NYSE:FC)
74Outperform
Positive Factors
Analyst Recommendation
Analyst's recommendation for Franklin Covey remains OUTPERFORM with a $45 price target, indicating a 27% upside from current levels.
Financial Performance
Recent results top expectations: Franklin Covey reported fiscal fourth quarter results that topped expectations.
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.
Near-term Earnings
Second quarter expectations for revenue and adjusted EBITDA are below estimates, affecting near-term earnings.
Franklin Covey Company (FC) vs. S&P 500 (SPY)
Market Cap
$364.46M
Dividend YieldN/A
Average Volume (3M)136.35K
Price to Earnings (P/E)19.0
Beta (1Y)0.40
Revenue Growth2.99%
EPS Growth12.29%
CountryUS
Employees1,084
SectorIndustrials
Sector Strength66
IndustryConsulting Services
Share Statistics
EPS (TTM)1.47
Shares Outstanding13,195,664
10 Day Avg. Volume197,476
30 Day Avg. Volume136,355
Financial Highlights & Ratios
PEG Ratio1.54
Price to Book (P/B)N/A
Price to Sales (P/S)1.31
Price to Cash Flow (P/CF)6.60
P/FCF Ratio6.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$55.00Price Target Upside96.43% 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 generates revenue through its comprehensive suite of training and consulting services. The company offers workshops, seminars, and online courses that address key areas such as leadership development, productivity enhancement, and organizational effectiveness. Revenue is primarily derived from subscriptions to its services, licensing of its content, and fees for its training programs. Additionally, Franklin Covey forms strategic partnerships with educational institutions and corporate clients to expand its reach and impact, further contributing to its earnings. The company's business model relies on a mix of direct sales, online platforms, and partnerships to distribute its products and services, enabling it to address the needs of a diverse client base worldwide.
Franklin Covey Company Financial Statement Overview
Summary
Franklin Covey Company demonstrates robust financial performance with strong revenue growth, effective margin management, and solid cash flow generation. Low leverage and a strong equity position further enhance financial stability. However, there's room for improvement in cash utilization efficiency.Income Statement
The income statement reveals strong performance with consistent revenue growth and improving profit margins. The TTM Gross Profit Margin is 75.53%, and the Net Profit Margin is 6.85%, indicating effective cost management. Revenue growth is robust at 10.42% over the past year, and the EBIT and EBITDA margins at 11.30% and 13.28%, respectively, show solid operational efficiency.85
Very Positive
Balance Sheet
The balance sheet indicates a stable financial position with a low Debt-to-Equity ratio of 0.02, showcasing minimal leverage risk. The Equity Ratio is 37.22%, reflecting a strong equity base. However, Return on Equity (ROE) at 24.46% signals efficient use of equity despite a slight decline in stockholders' equity over the TTM.75
Positive
Cash Flow
Cash flow analysis highlights strong cash generation with a Free Cash Flow growth of 118.16% over the past year. The Operating Cash Flow to Net Income Ratio at 2.89 indicates strong cash conversion from earnings. However, the Free Cash Flow to Net Income Ratio of 2.45 suggests some room for improvement in cash utilization efficiency.80
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 287.92M | 287.23M | 280.52M | 262.84M | 224.17M | 198.46M | Gross Profit |
| 217.47M | 221.07M | 213.49M | 201.91M | 172.90M | 145.37M | EBIT |
| 32.54M | 33.04M | 26.36M | 23.67M | 8.10M | 4.69M | EBITDA |
| 40.72M | 43.08M | 39.98M | 38.17M | 23.82M | 18.66M | Net Income Common Stockholders |
| 19.73M | 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 | ||||
| 48.40M | 56.56M | 22.19M | 46.92M | 42.07M | 18.30M | Operating Cash Flow |
| 56.96M | 60.26M | 35.74M | 52.25M | 46.18M | 27.56M | Investing Cash Flow |
| -10.32M | -11.31M | -13.55M | -5.33M | -14.31M | -11.87M | Financing Cash Flow |
| -27.18M | -38.66M | -44.18M | -32.67M | -11.48M | -16.56M |
Franklin Covey Company Technical Analysis
Negative
28.00
Price Trends
32.83
Negative
34.64
Negative
37.11
Negative
Market Momentum
-1.38
Negative
29.83
Positive
31.47
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 28 is below the 20-day moving average (MA) of 29.52, below the 50-day MA of 32.83, and below the 200-day MA of 37.11, indicating a bearish trend. The MACD of -1.38 indicates Negative momentum. The RSI at 29.83 is Positive, neither overbought nor oversold. The STOCH value of 31.47 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 0 New Risks
Franklin Covey Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $124.31B | 31.87 | 83.72% | 1.88% | 7.09% | 11.51% | |
77 Outperform | $307.94B | 92.63 | 7.12% | 0.64% | 9.55% | -2.28% | |
75 Outperform | $62.12B | 119.43 | 6.15% | ― | 16.94% | -62.24% | |
74 Outperform | $364.46M | 18.99 | 26.11% | ― | 2.99% | 12.29% | |
67 Neutral | $392.06B | 32.85 | 108.79% | 1.14% | 6.23% | 12.37% | |
66 Neutral | $3.04B | 22.07 | 45.56% | ― | 10.74% | 200.08% | |
62 Neutral | $8.07B | 13.60 | 3.76% | 3.13% | 3.60% | -14.67% |
* Industrials Sector Average
Performance Comparison
FC
Franklin Covey Company
28.00
-10.13
-26.57%
ADP
Automatic Data Processing
306.54
66.57
27.74%
ORCL
Oracle
141.94
17.05
13.65%
SAP
SAP AG
270.34
78.83
41.16%
WDAY
Workday
234.53
-34.30
-12.76%
BL
BlackLine
49.13
-14.79
-23.14%
Franklin Covey Company Earnings Call Summary
Earnings Call Date: Jan 8, 2025 | % Change Since: -20.68% | Next Earnings Date: Apr 2, 2025
Earnings Call Sentiment Neutral
The call reflected a balanced outlook, with notable achievements in education growth and new client acquisitions, but also highlighted challenges in enterprise and international revenue. The transition to a new sales model is expected to drive future growth.Highlights
Education Division Growth
The Education Division revenue grew by 11% in Q1, with contracted Leader in Me schools increasing by 58% from 52 to 82 schools year-over-year.
Successful Transition to New Sales Model
The transition to a new sales model focusing on expanding existing clients and acquiring new clients has been completed. Notable hires from companies like Zoom, LinkedIn, and Udemy enhance the sales team.
Strong Cash Flow
Cash flows from operating activities were strong at $14.1 million, and free cash flow was $11.4 million, reflecting solid financial health.
New Logo Acquisition
Secured significant new logos, including one of the 5 largest banks in America, with a $350,000 deal for leadership development.
Lowlights
Flat Enterprise Revenue
Enterprise revenue in North America remained flat year-over-year at $40.1 million, with a 2% decline in subscription and subscription services revenue.
International Revenue Decline
International direct operations revenue decreased by $0.5 million, primarily due to challenging business conditions in Asia.
Reduced Adjusted EBITDA
Adjusted EBITDA declined to $7.7 million from $11 million the previous year, due to increased growth investments.
Decreased Deferred Revenue
Billed deferred subscription revenue in North America decreased by 7%, and unbilled deferred revenue decreased by 13% year-over-year.
Company Guidance
During the Q1 2025 earnings call for Franklin Covey, the executives provided detailed guidance on financial performance and strategic initiatives. The company's revenue for the quarter increased by 1% to $69.1 million, with education sales growing 11% and flat sales in the enterprise segment. Adjusted EBITDA was $7.7 million, within the guidance range of $7.5 million to $8.5 million, while cash flows from operating activities were reported at $14.1 million. The company highlighted its ongoing growth investments, totaling $16 million for the year, which are expected to transition revenue growth from single-digit to consistent double-digit levels. The guidance for FY 2025 anticipates revenue between $295 million and $305 million in constant currency, with adjusted EBITDA projected at $40 million to $44 million. Key strategic efforts, such as the transformation of the sales force into specialized teams focusing on expansion and new client acquisition, are expected to enhance client penetration, retention, and new logo wins, ultimately boosting deferred subscription revenue and future cash flow.Franklin Covey Company Corporate Events
Executive/Board ChangesShareholder Meetings
Franklin Covey Approves Key Resolutions at Annual Meeting
Neutral
Jan 24, 2025
Franklin Covey Company held its Annual Meeting of Shareholders on January 24, 2025, where several key resolutions were passed. Notably, all director nominees were elected, executive compensation was approved, Deloitte & Touche was ratified as the independent accounting firm, and an amendment to the company’s Omnibus Incentive Plan was approved.
Business Operations and StrategyFinancial Disclosures
Franklin Covey Reports Modest Revenue Growth in Q1 2025
Neutral
Jan 8, 2025
Franklin Covey Co. reported its financial results for the first quarter of fiscal 2025, with a consolidated revenue increase of 1% to $69.1 million compared to the previous year. The company saw a notable 11% revenue growth in its Education Division, driven by increased sales of classroom materials and new initiatives, while the Enterprise Division’s sales remained flat, aligning with expectations during its North America sales force restructuring. Although operating income decreased due to increased expenses related to sales force realignment, the company maintained strong liquidity and affirmed its guidance for fiscal 2025. Franklin Covey is leveraging past strategic initiatives, such as transitioning to a subscription-based model and investing in technology, to enhance its market capture efforts.
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.