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Category: Stock Market and Chegg
Date: 11 February 2020 Stock Price: $44.61 We take a look at the 4th quarter earnings report of their 2019 fiscal year of Chegg Inc. a direct to student learning platform provider with 3.9 million subscribers and over 15 million unique visits to their platform each month.
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About Chegg Inc
Chegg is a Smarter Way to Student. As the leading direct-to-student learning platform, we strive to improve educational outcomes by putting the student first in all our decisions. We support students on their journey from high school to college and into their career with tools designed to help them pass their test, pass their class, and save money on required materials. Our services are available online, anytime and anywhere, so we can reach students when they need us most. Chegg is a publicly held company based in Santa Clara, California and trades on the NYSE under the symbol CHGG.
Overview of Chegg Inc's 4th quarter 2019 earnings report
The data below refers to the latest quarter's data (unless specified otherwise)
- Net revenues $125.504 million (up from $95.676 million for the same quarter of the previous year)
- Net revenues increased by 31.1% over the last 12 months
- Total operating expenses: $82.253 million (up from $66.062 million for the same quarter of the previous year)
- Total operating expenses increased by 24.5% over the last 12 months
- Net income: $8.219 million (up from $5.347 million for the same quarter of the previous year)
- Diluted earnings per share: $0.06 (up from $0.04 for the same quarter of the previous year)
- Number of shares in issue: 129.150 million (up from 125.610 million for the same period of the previous year)
- Cash and cash equivalents: $387.520 million
- Cash and cash equivalents per share: $3
- Cash and cash equivalents makes up 6.72% of Chegg Inc's market capital
- Cash and cash equivalents makes up 26.02% of Chegg Inc's total assets
- Goodwill in Chegg Inc's : $214.513 million
- Goodwill per share: $1.66
- Goodwill makes up 14.4% of Chegg Inc's total assets
- Stockholders equity in Chegg's: $498.829 million
- Stockholders equity per share: $3.82
- So Chegg's is trading at 11.6 times its stockholders equity per share, which is outside the expected range of between 2 and 4 times that most firms tend to trade at.
- Cash generated from operations for the fiscal year: $113.403 million
- Cash generated from operations per share: $0.87
Chegg (NYSE: CHGG) management commentary on 4th quarter 2019 earnings
SANTA CLARA, Calif.--(BUSINESS WIRE)-- Chegg, Inc. (NYSE:CHGG), a Smarter Way to Student®, today reported financial results for the three and twelve months ended December 31, 2019.
“2019 was a fantastic year for Chegg. Total revenue grew 28% year over year and we exceeded our profitability expectations, driven by leverage from our subscription services,” said Dan Rosensweig, CEO of Chegg, Inc., “Our strategy to provide direct-to-student services supporting millions of learners continues to deliver fantastic results and we couldn’t be more excited about 2020.” Rosensweig added.
“2019 was a fantastic year for Chegg. Total revenue grew 28% year over year and we exceeded our profitability expectations, driven by leverage from our subscription services,” said Dan Rosensweig, CEO of Chegg, Inc., “Our strategy to provide direct-to-student services supporting millions of learners continues to deliver fantastic results and we couldn’t be more excited about 2020.” Rosensweig added.
Business Outlook:
First Quarter 2020
First Quarter 2020
- Total Net Revenues in the range of $122 million to $125 million
- Chegg Services Revenues in the range of $99 million to $100 million
- Gross Margin between 67% and 68%
- Adjusted EBITDA in the range of $27.5 million to $28.5 million
- Total Net Revenues in the range of $522 million to $527 million
- Chegg Services Revenues in the range of $435 million to $437 million
- Gross Margin between 71% and 72%
- Adjusted EBITDA in the range of $162 million to $164 million
- Capital Expenditures in the range of $105 million to $115 million which includes approximately $50 million of net textbook purchases
Chegg Inc (NYSE: CHGG) stock price history
The image below obtained from Google, shows the stock price history of OneMain over the last 5 years. And its been a very good time for Chegg Ic. stockholders. 5 years ago the stock of Chegg Inc was trading at around $6.40 a stock and its currently trading at $44.61 a stock. That's a very strong return of 597% provided to Chegg Inc stockholders over the last 5 years.
The stock of Chegg Inc is trading at very close to its 52 week high of $48.22 and it is far away from its 52 week low of $28.29 a stock, which to us is an indication that the short term sentiment and momentum of Chegg Inc. stock is very positive at this point in time.
The stock of Chegg Inc is trading at very close to its 52 week high of $48.22 and it is far away from its 52 week low of $28.29 a stock, which to us is an indication that the short term sentiment and momentum of Chegg Inc. stock is very positive at this point in time.
Recent coverage of Chegg Inc.
The extract below discusses the latest regarding Chegg Inc. as obtained from Zacks.com
The earnings report, which is expected to be released on February 10, 2020, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.
Zacks Consensus Estimate
This provider of online textbook rental services is expected to post quarterly earnings of $0.31 per share in its upcoming report, which represents a year-over-year change of +24%. Revenues are expected to be $123.22 million, up 28.8% from the year-ago quarter.
Estimate Revisions Trend
The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Read the full article here
The earnings report, which is expected to be released on February 10, 2020, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.
Zacks Consensus Estimate
This provider of online textbook rental services is expected to post quarterly earnings of $0.31 per share in its upcoming report, which represents a year-over-year change of +24%. Revenues are expected to be $123.22 million, up 28.8% from the year-ago quarter.
Estimate Revisions Trend
The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Read the full article here
Chegg Inc. (NYSE:CHGG) stock valuation
So what do we value Chegg stock at after the release of their 4th quarter 2019 earnings a? Based on Chegg our valuation models provides a target (full value) price for Chegg Inc at $42.70 a stock. We therefore believe that the stock of Chegg Inc is slightly overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $42.70 therefore we believe a good entry point into Chegg Inc stock is at $38.40 or below. We expect the stock of Chegg Inc to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is slightly overvalued at this point in time.
Since the stock of Chegg Inc is trading at close to our target price (full value price) we rate the stock of Chegg as a hold
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $42.70 therefore we believe a good entry point into Chegg Inc stock is at $38.40 or below. We expect the stock of Chegg Inc to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is slightly overvalued at this point in time.
Since the stock of Chegg Inc is trading at close to our target price (full value price) we rate the stock of Chegg as a hold
Next earnings release of Chegg Inc.
It is expected that Chegg Inc. will release their 1st quarter 2020 earnings report in early May 2020