Replies to post #42 on Educational Development Corporation (EDUC)

[wadirum1]

I agree that $300M seems like a stretch. Even if the demand is there, it would be hard for any company to ramp that quickly.

But even if they only do HALF that, but get back to 7 percent margins, we have 0.07*150M = $10.5M. Divide by 4M shares and we get about $2.50 per share or a P/E of 3.

A P/E of 3 is absurdly low. And I'm using numbers below their worst-case scenarios.

If we want to let our imaginations run, then try 10 percent margins on 300M in revs... Earnings would be larger than current market cap. I remember when I was buying FRPT at less than the cash they had on hand. Those sorts of cases do indeed occur from time to time. But even at a forward P/E of 3, this is a screaming bargain.

[Uglytuco]

Correct Value. The key is that the market is there. This market is huge. EDUC is a tiny player that knows how to do it well. Don't know what the fraction of one percent market share is that they have, but it's very easy to grow market share from a fraction of a percent versus holding onto a large percent.

They need to iron out the wrinkles. Can and will are different.

[wadirum1]

Btw, does anyone know if Maj Soueidan and his rigorous GeoInvesting team are still in EDUC (they were as of last Aug. 2016) or have they sold out? (One needs to be a paid subscriber to see their research).

I checked in with Soueidan via twitter and had a productive exchange. My guess is that they did in fact get cold feet after the conference call over the compliance issue and over reduced margins.

He missed the part of the CC, however, that dealt with how the compliance issue was already resolved. Perhaps their move was hasty? And perhaps their move opened up a buying opportunity?

Time will tell.