One-glance verdict
Undervalued
$6.15 our estimate vs market $1.30
79% below our estimate, below the bear case
Fundamentals snapshot
Educational Development Corporation
EDUC · NGM · Communication Services · Publishing
Current price
$1.30
52-week range
$1.20 - $1.73
Market cap
$11.08M
Balance sheet
Distressed
-4.86x Concerning
Net debt $5.08M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Returns 5.0% on equity, ahead of 16% of its peers.
- Reward Free cash flow was positive in 7/10 years.
- Risk Operating margin compressed from -2.9% to -26.8% over 3 years.
- Risk Insider ownership is only 11.9% (peer median: 21.0%).
What this company does
Educational Development Corporation
Educational Development Corporation sells children's educational books and toys, primarily making money through a network of independent sellers who connect directly with families at home parties and online. The company also supplies its products to traditional bookstores and schools, giving it two different ways to reach parents and educators.
How the company got here
Founded in 1965, Educational Development Corporation (EDC) started as a publisher of children's books. A major turning point was becoming the U.S. distributor for Usborne Publishing, a British book publisher, which formed the foundation of its direct-selling business. In 1989, it created a home-party sales division, originally called Usborne Books & More, to sell these popular books directly to families. Over the years, the company expanded by acquiring other brands, including Kane Miller Books, Learning Wrap-Ups, and SmartLab Toys, to offer a wider range of educational products. This direct-to-consumer approach has become the main driver of its business.
What it actually does
Educational Development Corporation sells a variety of engaging and educational products for children, from babies to young teenagers. You would recognize their products as colorful touchy-feely board books, activity books with stickers or flashcards, and storybooks from around the world. They also sell educational toys and games focused on science and math, like STEAM (Science, Technology, Engineering, Arts, and Math) kits and learning manipulatives (physical objects used to teach concepts). The company owns and publishes some of these brands, like Kane Miller and SmartLab Toys, and also distributes books for others, like the well-known Usborne brand from the U.K.
PaperPie
This is the company's largest business segment, making up about 87% of its sales. PaperPie is the new name for the company's direct-selling division, formerly known as Usborne Books & More. It operates through a network of thousands of independent consultants, called Brand Partners, who sell products directly to customers. These individuals earn a commission (a percentage of the sales) by hosting online or in-person parties, running book fairs at schools and libraries, and using social media to reach families. This segment sells all of the company's brands, including Usborne, Kane Miller, SmartLab Toys, and Learning Wrap-Ups.
Publishing
This is the smaller part of the company, representing about 13% of its revenue (the money it brings in from sales). The Publishing division sells books and educational products to retail stores rather than directly to individuals. Its customers include national bookstore chains, local toy and gift shops, school supply stores, and museums. This segment uses a more traditional sales model with commissioned sales representatives and an in-house team that contacts these retail businesses. It primarily sells the brands that EDC owns, such as Kane Miller, SmartLab Toys, and Learning Wrap-Ups.
What management is betting on now
The company's main focus is on strengthening its financial health and rebuilding its network of sales consultants. Management has been working to reduce company debt, recently selling its large headquarters and warehouse complex to raise cash and pay off bank loans. A key priority is to increase the number of active 'Brand Partners' in its PaperPie division, as this directly drives sales growth. They are also focused on managing expenses carefully to improve profitability (the ability to make a profit after all costs are paid). By strengthening the balance sheet (a snapshot of the company's financial health) and growing its sales force, the company aims to return to consistent growth.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q2
$-953.90K
FY2025 Q3
$4.33M
FY2025 Q4
$-1.70M
FY2026 Q1
$1.19M
FY2026 Q2
$-38.30K
FY2026 Q3
$2.41M
FY2026 Q4
$-2.10M
FY2027 Q1
$468.30K
Revenue
$4.76M
Net income
$-1.40M
Diluted EPS
-0.16
Operating cash flow
$564.30K
Free cash flow
$468.30K
Fetching…
Sources
Revenue
$4.18M
Net income
$-3.11M
Diluted EPS
-0.37
Operating cash flow
$-2.00M
Free cash flow
$-2.10M
Fetching…
Sources
Revenue
$7.01M
Net income
$7.80M
Diluted EPS
0.91
Operating cash flow
$2.54M
Free cash flow
$2.41M
Fetching…
Sources
Revenue
$4.62M
Net income
$-1.29M
Diluted EPS
-0.15
Operating cash flow
$63.20K
Free cash flow
$-38.30K
Fetching…
Sources
Revenue
$7.11M
Net income
$-1.08M
Diluted EPS
-0.13
Operating cash flow
$1.40M
Free cash flow
$1.19M
Fetching…
Sources
Revenue
$6.64M
Net income
$-1.35M
Diluted EPS
-0.16
Operating cash flow
$-1.57M
Free cash flow
$-1.70M
Fetching…
Sources
Revenue
$11.05M
Net income
$-835.70K
Diluted EPS
-0.10
Operating cash flow
$4.44M
Free cash flow
$4.33M
Fetching…
Sources
Revenue
$6.51M
Net income
$-1.80M
Diluted EPS
-0.22
Operating cash flow
$-866.10K
Free cash flow
$-953.90K
Fetching…
Sources
Is it cheap or expensive?
Fair value $6.15 vs current price $1.30
Our most-likely fair value is $6.15 a share — about 373.1% above today's price of $1.30, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $5.1M. Interest coverage -4.9x.
Net debt
$5.08M
Interest coverage
-4.86x
Educational Development Corporation's profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
EDUC
BASELINE
Educational Development Corporation
Total debt $6.74M Interest coverage -4.86x This is the baseline the peer rows are being compared against.
Total debt $419.50M Interest coverage 1.85x This peer still has a real interest-payment cushion, while EDUC does not.
Total debt $50.72M Interest coverage -194.67x Neither company has much profit cushion over interest right now.
Total debt $1.64M Interest coverage 2.34x This peer still has a real interest-payment cushion, while EDUC does not.
Total debt $46.62M Interest coverage 30.19x This peer still has a real interest-payment cushion, while EDUC does not.
Total debt $15.52M Interest coverage 88.59x This peer still has a real interest-payment cushion, while EDUC does not.
What you should know
The case for and against EDUC
3 Rewards
2 Risks
Rewards
-
Returns 5.0% on equity, ahead of 16% of its peers.
-
Free cash flow was positive in 7/10 years.
-
Trades at 5.4x P/E vs peer median 15.9x (65.9% cheaper).
Risks
-
Operating margin compressed from -2.9% to -26.8% over 3 years.
-
Insider ownership is only 11.9% (peer median: 21.0%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
5.42x
Forward P/E
3.10x
P/B
0.27x
P/S
0.54x
EV/EBITDA
-2.89x
PEG ratio
2.01x
Profitability
How much profit each dollar creates
Gross margin
59.8%
Operating margin
-26.8%
Net margin
9.8%
ROE
5.0%
ROA
-6.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.16x
Current ratio
3.20x
Quick ratio
0.37x
Total debt
$6.74M
Total cash
$1.66M
Growth
How the business has been compounding
Revenue TTM
$20.56M
Revenue 5Y CAGR
-6.7%
EPS TTM
0.24
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$1.17M
Free CF TTM
$1.46M
FCF margin
7.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2022-02-18