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1. Company Snapshot

1.a. Company Description

Educational Development Corporation, a publishing company, operates as a trade co-publisher of educational children's books in the United States.It operates through two segments, Publishing and Usborne Books & More (UBAM).The company offers various books, including touchy-feely board books, activity books and flashcards, adventure and search books, art books, sticker books, and foreign language books, as well as internet-linked books comprising science and math titles, and chapter books and novels.


Educational Development Corporation markets its products to retail accounts, which include book, school supply, toy and gift stores and museums, through commissioned sales representatives, trade and specialty wholesalers, and its internal tele-sales group; and through a network of independent sales consultants through internet sales, direct sales, home shows, and book fairs.Educational Development Corporation was incorporated in 1965 and is headquartered in Tulsa, Oklahoma.

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1.b. Last Insights on EDUC

The recent 3-month performance of Educational Development Corporation was negatively impacted by the announcement of a new brokerage agreement with Keen-Summit to market the sale of the Hilti Complex. This development may indicate a potential divestiture of the company's headquarters and distribution warehouse, which could disrupt operations and lead to increased costs. Furthermore, the company's financial situation may be precarious, as evidenced by the need to extend its credit agreement with BOKF, NA, which now matures in July 2025.

1.c. Company Highlights

2. Educational Development Corporation Posts Significant Gain from Hilti Complex Sale

Educational Development Corporation (EDUC) reported its financial results for the fiscal 2026 third quarter, with net revenues of $7 million, down from $11.1 million in the prior year quarter. Earnings before income taxes were $10.6 million, compared to a loss of $1.1 million in the third quarter last year, primarily due to a $12.2 million gain from the sale of the Hilti Complex. Net earnings totaled $7.8 million, or $0.91 per share, compared to a loss of $800,000, or $0.10 per share, in the prior year quarter. The significant gain from the sale of the Hilti Complex drove the positive earnings, offsetting the decline in net revenues.

Publication Date: Jan -11

📋 Highlights
  • Hilti Complex Sale Gain:: $12.2M gain from the sale boosted Q3 earnings before taxes to $10.6M, reversing a $1.1M loss in the prior year quarter.
  • Revenue Decline:: Net revenues fell to $7M in Q3 2026, down from $11.1M in the prior year, with active brand partners dropping to 5,100 from 12,400.
  • Inventory Reduction:: Year-to-date inventory decreased by $5.6M to $39.1M, with $5.6M in cash flows used to pay vendors and reduce bank debt.
  • Strong Margins via New Program:: Launch of Gathered Goods aims to improve margins through in-house custom product design and digital fundraising expansion.

Operational Performance

The company's average active brand partners totaled 5,100 compared to 12,400 in the prior year quarter, indicating a significant decline in the number of brand partners. The company's inventory levels decreased from $44.7 million at the beginning of fiscal year 2026 to $39.1 million at the end of November, with approximately 50% of the inventory related to Usborne. Management cited a committed leader base, more productive brand partners, and strategic program innovation as positive factors for future growth.

New Initiatives and Future Plans

The company launched its reimagined fundraising program, Gathered Goods, which features custom products designed and created in-house, allowing for better control over quality, storytelling, and brand alignment. Management is optimistic about the path ahead, planning to focus on increasing brand partner counts, introducing new products, and implementing a refreshed marketing strategy. The company has also formed an AI task force to explore ways to utilize AI as part of its overall strategy.

Valuation and Outlook

With a P/E Ratio of -2.68 and an EV/EBITDA of -19.31, the company's valuation metrics indicate a challenging earnings environment. However, the company's Free Cash Flow Yield of 31.08% suggests a potential opportunity for investors. As the company moves forward with its growth plan, investors will be watching to see if the company can execute on its strategy and return to profitability. The actual EPS came out at $0.91, significantly higher than estimates, driven by the gain from the sale of the Hilti Complex.

3. NewsRoom

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Educational Development Q3 Earnings Call Highlights

Jan -10

Source: defenseworld.net

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Educational Development Corporation (EDUC) Q3 2026 Earnings Call Transcript

Jan -08

Source: seekingalpha.com

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Educational Development Corporation Announces Fiscal 2026 Third Quarter and Year to Date Results

Jan -08

Source: newsfilecorp.com

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Educational Development (NASDAQ:EDUC) Stock Price Passes Below 200-Day Moving Average – Here’s Why

Dec -25

Source: defenseworld.net

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Educational Development Corporation Announces Completion of Corporate Headquarters Sale for 32.2 Million

Oct -28

Source: newsfilecorp.com

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Educational Development Corporation (EDUC) Q2 2026 Earnings Call Transcript

Oct -09

Source: seekingalpha.com

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Educational Development Corporation Announces Fiscal 2026 Second Quarter and Year to Date Results

Oct -09

Source: newsfilecorp.com

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Educational Development Corporation Announces 1st Amendment to Real Estate Contract and Receipt of Buyers Intent to Proceed with Purchase of Real Estate

Oct -06

Source: newsfilecorp.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.36%)

6. Segments

PaperPie

Expected Growth: 10.2%

Growing demand for educational resources, increasing popularity of book clubs, and rising parental interest in early childhood education drive the growth of PaperPie, a curated book club for kids from Educational Development Corporation.

Publishing

Expected Growth: 4.5%

Growing demand for digital learning resources, increasing adoption of online educational platforms, and rising need for personalized learning experiences drive the growth of the publishing segment in Educational Development Corporation.

7. Detailed Products

Usborne Books & More

A wide range of children's books and educational materials

Kane/Miller Books

Award-winning children's books from around the world

EDC Publishing

Educational materials and workbooks for children

Usborne Digital

Interactive digital books and educational apps

Rainbow Book Clubs

Monthly book clubs for children, featuring handpicked titles

8. Educational Development Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Educational Development Corporation is moderate due to the presence of alternative educational products and services.

Bargaining Power Of Customers

The bargaining power of customers is high due to the availability of alternative educational products and services, giving customers the power to negotiate prices and terms.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's ability to negotiate prices and terms with its suppliers.

Threat Of New Entrants

The threat of new entrants is moderate due to the presence of barriers to entry, such as regulatory requirements and high startup costs.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established competitors in the educational products and services market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 43.27%
Debt Cost 9.59%
Equity Weight 56.73%
Equity Cost 9.59%
WACC 9.59%
Leverage 76.27%

11. Quality Control: Educational Development Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 1.9

Quality: 5.0

Yield: 10.0

Momentum: 5.5

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EDC

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Yield: 1.0

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Value: 5.7

Growth: 3.6

Quality: 4.3

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A-Score: 2.7/10

Value: 8.2

Growth: 2.1

Quality: 4.4

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.39$

Current Price

1.39$

Potential

-0.00%

Expected Cash-Flows