Gold prices steady amid Fed rate cut hopes; Trump-Putin talks awaited
On Wednesday, JPMorgan analyst Andrew Steinerman adjusted the price target for KinderCare Learning Companies (NYSE:KLC) to $15.00, down from $15.00, while sustaining an Overweight rating on the stock. The revision follows KinderCare’s first-quarter financial results which showcased an adjusted earnings per share (EPS) of $0.23, surpassing the $0.18 projection by JPMorgan. Despite the earnings beat, the company experienced a slight year-over-year organic revenue growth of 1.2%, which was below the anticipated 3.2%. According to InvestingPro data, KLC’s stock has declined over 45% in the past six months, though analysts maintain a bullish consensus with a target suggesting significant upside potential.
KinderCare’s total revenue for the first quarter of 2025 increased by 2.1% year-over-year, with organic growth contributing 1.2% to this figure. The company reported an adjusted EBITDA of $84 million, exceeding expectations due to tuition hikes and stringent cost management. However, same-center occupancy saw a minor decline to 69.1% compared to 69.6% in the previous year. InvestingPro analysis reveals the company operates with a significant debt burden, with a debt-to-equity ratio of 12.6x, while trading at a relatively high EBITDA multiple of 24.4x.
The company reaffirmed its full-year 2025 guidance, expecting revenues between $2.75 billion and $2.85 billion, representing a 3% to 7% growth year-over-year. Adjusted EBITDA is projected to be in the range of $310 million to $325 million, with adjusted EPS forecasted between $0.75 and $0.85. Despite the positive outlook, the midpoint of KinderCare’s revenue guidance is only slightly higher than JPMorgan’s projection, suggesting potential concerns about achieving the higher end of the guided range. InvestingPro subscribers can access detailed financial health scores and 10+ additional ProTips that provide deeper insights into KLC’s growth potential and market position.
Steinerman noted that the early childhood education (ECE) industry is currently encountering hurdles related to enrollment growth and pricing. There are apprehensions about KinderCare’s capability to expand in alignment with its medium-term growth objectives. Nonetheless, the analyst anticipates that the negative effects of policy uncertainty affecting the industry will diminish over time. While current financials show challenges with a negative return on assets of -1.89%, InvestingPro’s analysis indicates net income is expected to grow this year, with analysts projecting profitability in 2025.
In other recent news, Kindercare Learning Companies Inc. announced its first-quarter 2025 earnings, revealing mixed results. The company exceeded earnings per share (EPS) expectations, reporting $0.23 compared to the forecasted $0.16, a 43.75% beat. However, revenue fell short of projections, reaching $668 million against an anticipated $689.12 million. Despite this revenue miss, Kindercare maintained its full-year revenue guidance of $2.75-$2.85 billion. The company also reported a 2% year-over-year revenue increase and a 12% rise in adjusted EBITDA, amounting to $84 million. Kindercare expanded its operations by adding 10 new centers and entering Idaho through an acquisition. Analysts have not provided any upgrades or downgrades following the earnings report. The company remains optimistic about its long-term growth strategy, including plans to open 20-25 new centers annually.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.