BNED

Barnes & Noble Education Inc

Consumer


Presented:09/14/2021
Price:$10.32
Cap:$0.53B
Current Price:$9.11
Cap:$0.24B

Presented

Date09/14/2021
Price$10.32
Market Cap$0.53B
Ent Value$0.94B
P/E RatioN/A
Book Value$4.97
Div Yield0%
Shares O/S51.59M
Ave Daily Vol627,884
Short Int4.43%

Current

Price$9.11
Market Cap$0.24B
Barnes and Noble Education, Inc. engages in the management and operation of bookstore chains in universities. It operates through the following segments: Retail, Wholesale, and Digital Student Solutions (DSS). The Retail segment operates physical and virtual campus bookstores. The Wholesale segment sells hardware and software that provides inventory management and point-of-sale solutions to college bookstores. The DSS segment includes direct-to-student product and service offerings to assist students to study more effectively and improve academic performance. The company was founded by Leonard Riggio in 1965 and is headquartered in Basking Ridge, NJ.

Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Barnes & Noble Education Inc (BNED), Chegg Inc (CHGG), Houghton Mifflin Harcourt Co (HMHC)

Highlights

The presenter is long shares of Barnes & Noble Education Inc (BNED), which is primarily an outsourced operator of university bookstores following the 2015 spin-off from Barnes & Noble. By operating bookstores on behalf of the schools, BNED receives a revenue share and avoids the fixed cost structure associated with owning brick-and-mortar stores. While the retail business (courseware, textbooks, and general merchandise) makes up ~90% revenues, BNED operates two other business lines: its wholesale business represents ~10% of revenues but is strategically important because it allows for vertical integration and inventory management; Digital Student Solutions (DSS) currently generates de minimis revenues but is growing (41% YoY growth during the previous quarter). The stock has doubled this year to $10 per share, but there could be meaningful upside remaining based on a transformation in the business (i.e., First Day Complete) and a recovery in merchandise sales as students return to campuses. Applying an 8x multiple on her fiscal year 2023 (ends April 2023) EBITDA estimate yields a share price target of $17 – $25 with incremental optionality. 

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