Capella Education (NASDAQ: CPLA) and K12 (NYSE:LRN) are both small-cap consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Volatility and Risk

Capella Education has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500. Comparatively, K12 has a beta of -0.2, meaning that its stock price is 120% less volatile than the S&P 500.

Dividends

Capella Education pays an annual dividend of $1.64 per share and has a dividend yield of 2.4%. K12 does not pay a dividend. Capella Education pays out 42.4% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Capella Education and K12’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capella Education $438.59 million 1.80 $71.59 million $3.87 17.48
K12 $888.52 million 0.82 $35.91 million N/A N/A

Capella Education has higher revenue, but lower earnings than K12.

Institutional and Insider Ownership

89.1% of Capella Education shares are held by institutional investors. Comparatively, 78.6% of K12 shares are held by institutional investors. 3.6% of Capella Education shares are held by company insiders. Comparatively, 18.3% of K12 shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Capella Education and K12’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capella Education 10.49% 20.23% 15.34%
K12 0.05% 3.18% 2.40%

Analyst Recommendations

This is a summary of current ratings for Capella Education and K12, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capella Education 0 1 2 0 2.67
K12 0 0 2 0 3.00

Capella Education currently has a consensus target price of $85.36, indicating a potential upside of 26.18%. K12 has a consensus target price of $18.50, indicating a potential upside of 3.70%. Given Capella Education’s higher possible upside, equities analysts clearly believe Capella Education is more favorable than K12.

Summary

Capella Education beats K12 on 9 of the 14 factors compared between the two stocks.

Capella Education Company Profile

Capella Education Company is an education services company. The Company provides direct path between learning and employment through its online postsecondary education offerings and through programs to develop job-ready skills for demand markets. The company’s segments include post-secondary segment and job-ready skills segment. The post-secondary segment has Capella University (the University) and Sophia Learning, LLC (Sophia). The job-ready skills segment has Capella Learning Solutions, LLC (CLS), Hackbright Academy, Inc. (Hackbright) and DevMountain, LLC (DevMountain). The Company’s program offers six markets, which include public service leadership; nursing and health sciences; social and behavioral sciences; business and technology; education and undergraduate studies. Capella University offers over 1,940 online courses and approximately 50 academic programs with approximately 150 specializations to approximately 38,000 learners.

K12 Company Profile

K12 Inc. (K12) is a technology-based education company. The Company offers curriculum, software systems and educational services designed to facilitate individualized learning for students in kindergarten through 12th grade (K-12). It provides a continuum of technology-based educational products and solutions to public school districts, public schools, virtual charter schools, private schools and families. The Company offers a set of products and services primarily to three lines of business, which include Managed Public School Programs, which consists of virtual and blended schools; Institutional business, which includes educational products and services sold to school districts, public schools and other educational institutions, and Private Pay Schools and Other, which includes private schools, including international, for which it charges student tuition and direct consumer sales. It sells individual online courses and supplemental educational products directly to families.

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