Educational Development Corporation (EDUC) | Investment Case

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

Last Price	1.3
Change Percentage	-0.76%
Open	1.28
Previous Close	1.31
Market Cap ( Millions)	11
Volume	2822
Year High	1.95
Year Low	0.92
M A 50	1.39
M A 200	1.31

FCF Yield	33.94%
Dividend Yield	0.00%
ROE	-11.37%
Debt / Equity	80.53%
Net Debt / EBIDTA	-1373.60%
Price To Book	0.29
Price Earnings Ratio	-2.45
Price To FCF	2.95
Price To sales	0.38
EV / EBITDA	-18.84

2. Educational Development Corporation's Q2 FY2026 Results: A Challenging Quarter

Educational Development Corporation reported a decline in net revenues to $4.6 million in the second quarter of FY2026, compared to $6.5 million in the prior year. The company's losses before income taxes narrowed to $1.8 million from $2.5 million in the prior year. The actual EPS came out at -$0.19, missing estimates of $0.04. The decrease in revenue was attributed to reduced brand partner levels in the PaperPie division and higher-than-normal discounts in recent sale events.

Publication Date: Oct -28

                                    📋 Highlights
                                    Revenue Decline:
                                                Q2 net revenues fell to $4.6M from $6.5M YoY due to reduced brand partners and discounted sales events.
Brand Partner Drop:
                                                PaperPie brand partners dropped to 5,800 from 13,900 YoY, linked to reduced new title introductions.
Loss Reduction:
                                                Pre-tax losses narrowed to $1.8M from $2.5M YoY, supported by $4M cash flow from inventory reduction.
Headquarters Sale:
                                                $100K earnest money received for the HQ sale to 10Mark Holdings, expected to resolve credit default.
Marketing Strategy:
                                                Focused on tech-driven campaigns and tools to attract millennials/Gen Z, with $3-5M post-sale financing plans.

                                

Operational Challenges and Strategic Response

The company faced significant operational challenges, including a decline in average active PaperPie brand partners to 5,800 from 13,900 in the second quarter last year. To address this, Educational Development Corporation is focusing on increasing brand partner counts by targeting a new generation of millennials and Gen Z. The company has developed a conservative phased approach to introducing new products and is executing targeted promotions and end-of-year campaigns to drive customer engagement.

Financial Flexibility and Liquidity

The company has made progress in reducing inventory levels, generating $4 million in cash flow. Educational Development Corporation is no longer under an active credit agreement with the bank and is currently in default status, but expects to complete the sale of its headquarters building and pay off the loan balances. The company is developing options for financing post-building sale close, planning to start with a conservative $3-5 million credit line.

Valuation and Outlook

Given the current financial performance, the stock's valuation metrics appear to reflect the challenges faced by the company. The P/S Ratio stands at 0.44, and the EV/EBITDA is -21.97, indicating that the market has priced in significant difficulties. Analysts estimate next year's revenue growth at -72.1%, suggesting a continued challenging environment. The company's efforts to increase brand partner counts and drive customer engagement will be crucial in determining its future prospects.

3. NewsRoom

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

Oct -28

Source: newsfilecorp.com

Educational Development Corporation (EDUC) Q2 2026 Earnings Call Transcript

Oct -09

Source: seekingalpha.com

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

Oct -09

Source: newsfilecorp.com

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

Educational Development Corporation (EDUC) Q1 2026 Earnings Call Transcript

Sep -22

Source: seekingalpha.com

Educational Development Corporation Announces Fiscal Year 2026 Second Quarter Earnings Call

Sep -10

Source: newsfilecorp.com

Educational Development Corporation Announces Sale and Leaseback Agreement of Headquarters and Warehouse Facility

Aug -21

Source: newsfilecorp.com

Educational Development Corporation Announces Extension of Credit Agreement with BOKF

Aug -12

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

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

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Saga Communications

A-Score: 5.4/10

Value: 6.9

Growth: 1.9

Quality: 5.1

Yield: 10.0

Momentum: 2.0

Volatility: 6.3

1-Year Total Return ->

John Wiley & Sons

A-Score: 4.9/10

Value: 5.2

Growth: 2.9

Quality: 5.6

Yield: 7.0

Momentum: 2.0

Volatility: 7.0

1-Year Total Return ->

Scholastic

A-Score: 4.9/10

Value: 7.3

Growth: 4.2

Quality: 3.7

Yield: 5.0

Momentum: 6.0

Volatility: 3.3

1-Year Total Return ->

Gannett Co

A-Score: 3.5/10

Value: 7.4

Growth: 3.6

Quality: 4.2

Yield: 0.0

Momentum: 3.0

Volatility: 2.7

1-Year Total Return ->

EDC

A-Score: 3.3/10

Value: 9.6

Growth: 2.7

Quality: 4.1

Yield: 1.0

Momentum: 1.0

Volatility: 1.3

1-Year Total Return ->

Lee Enterprises

A-Score: 2.9/10

Value: 10.0

Growth: 0.9

Quality: 5.1

Yield: 0.0

Momentum: 0.0

Volatility: 1.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-5.47%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.59%

Educational Development Corporation - US2814791057

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on EDUC

1.c. Company Highlights

Strong Momentum

Medium Volatility

Average Yield

Revenues Miss

Average Quality

Stable Momentum

More Volatile

Cheaper

Lower Growth

Weak Momentum

Average Growth

2. Educational Development Corporation's Q2 FY2026 Results: A Challenging Quarter

Operational Challenges and Strategic Response

Financial Flexibility and Liquidity

Valuation and Outlook

3. NewsRoom

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%

Publishing

Expected Growth: 4.5%

7. Detailed Products

Usborne Books & More

Kane/Miller Books

EDC Publishing

Usborne Digital

Rainbow Book Clubs

8. Educational Development Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.3$

Current Price

1.3$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA