CNGO
Cengage Learning Holdings II Inc
Consumer, TMT, Credit
04/16/2021
Presented
| Date | 04/12/2021 |
| Price | $12.75 |
| Market Cap | $0.97B |
| Ent Value | $2.29B |
| P/E Ratio | N/A |
| Book Value | N/A |
| Div Yield | 0% |
| Shares O/S | 76.43M |
| Ave Daily Vol | 60,854 |
| Short Int | N/A |
Current
| Price | $17.75 |
| Market Cap | $1.11B |
| Cengage Learning Holdings II, Inc. is an education and technology company, which engages in the provision of content, print and digital teaching and learning solutions, software, and associated educational services. It operates through the following segments: Learning, Gale, and International. The Learning segment involves in producing a digital and print educational solutions and associated services for the academic, skills, and school markets. The Gale segment offers research platforms which provide access to original content, collections of primary source materials, and aggregated periodicals to learners at libraries, colleges, universities, schools, and businesses. The International segment consists of distributing educational solutions in academic disciplines. The company is headquartered in Boston, MA. |
Publicly traded companies mentioned herein: Cengage Learning Holdings II Inc (CNGO), Coursera Inc (COUR), KKR & Co (KKR), Pearson PLC (PSON LN)
Highlights
The presenter is long shares of Cengage Learning Holdings II Inc (CNGO), which currently trades OTC at ~$16 per share. Since CNGO emerged from bankruptcy in 2014, the investment thesis for CNGO has been the company’s transition from print to digital improving retention, margins, and FCF. COVID-19 forced schools to pivot to remote learning, which pulled forward this transition by 5 – 10 years in the presenter’s view. While this is beneficial to the company and the industry overall, the presenter notes that management hasn’t gone out of its way to share this story with the public markets. Instead, he believes management is more focused on executing its repositioning story. Along with this ongoing shift, the presenter sees several other catalysts (e.g., refinancing the cap structure, asset sales to delever, potential liquidity event in the public markets, etc.) that can drive shareholder value. Over the next twelve months (fiscal year ending March 31, 2022), he is anticipating that CNGO will generate ~$350MM of EBITDA. The current ~$16 share price values the company at ~8x his EBITDA projection, and by this time next year he expects investors to give CNGO credit for these factors and the stock to trade at ~11x EBITDA, which yields a price target in the low-$30 range.
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