Chegg Intrinsic Stock Value – CHEGG Reports Record Fourth Quarter Earnings for Fiscal Year 2022
March 20, 2023
Earnings Overview
CHEGG ($NYSE:CHGG) reported their fiscal year 2022 fourth quarter earnings results on December 31, 2022. Total revenue for this period was USD 1.9 million, a 92.3% decrease year-on-year. Net income was USD 205.2 million, dropping 1.1% from the same quarter of the previous year.
Transcripts Simplified
Chegg reported positive results for the fourth quarter and full year of 2022 with total revenue of $767 million and Chegg Services revenue growing 10% to $734 million. Adjusted EBITDA margin was 33%, free cash flow margin was 20%, and Chegg ended the year with cash and investments of $1.3 billion. In 2023, Required Materials is expected to represent less than $5 million in revenue for the full year, and Chegg is changing the way it reports revenue to better represent its subscription services. The company also used its balance sheet to opportunistically buy back $500 million in principal of its convertible securities for approximately $400 million, and has $643 million remaining under the securities repurchase program.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Chegg. More…
| Total Revenues | Net Income | Net Margin |
| 766.9 | 266.64 | 27.8% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Chegg. More…
| Operations | Investing | Financing |
| 255.74 | 104.89 | -744.8 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Chegg. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 2.47k | 1.35k | 8.34 |
Key Ratios Snapshot
Some of the financial key ratios for Chegg are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 23.1% | -20.6% | 14.3% |
| FCF Margin | ROE | ROA |
| 19.9% | 6.4% | 2.8% |
Stock Price
The stock opened at $21.0 and closed at $21.0, down by 1.5% from the last closing price of 21.3. Despite this slight drop in share price, CHEGG’s financial results were impressive. The company attributed its strong performance to its focus on digital transformation, expansion into new markets, and successful execution of its growth initiatives.
CHEGG’s management team is confident that its efforts to drive growth are paying off and that its long-term prospects remain bright. Looking forward to FY2023, the company has already increased its marketing budget and is looking to expand its product offerings in order to continue its momentum. Live Quote…
Analysis – Chegg Intrinsic Stock Value
At GoodWhale, we recently conducted an analysis of CHEGG‘s wellbeing. Through our proprietary Valuation Line, we determined that the intrinsic value of CHEGG share is around $61.4. However, CHEGG stock is currently traded at $21.0, which means it is undervalued by 65.8%. This presents a great opportunity for investors to buy the stock at a discounted price and reap the benefits when the stock price increases in the future. More…
Peers
Chegg Inc is an American education technology company based in Santa Clara, California. The company offers digital and physical textbook rentals, online tutoring, and other student services. Chegg is one of the largest online textbook rental companies in the United States. The company has been criticized for its business model, which has been likened to textbook flipping, and for its environmental impact.
Chegg’s competitors include: CognaEducacao SA, Perdoceo Education Corp, Wah Fu Education Group Ltd.
– CognaEducacao SA ($OTCPK:COGNY)
Cogna Educacao SA is a publicly traded company with a market capitalization of 1.07 billion as of 2022. The company operates in the education sector and provides educational services and products in Brazil and internationally. The company has a return on equity of 2.54%.
– Perdoceo Education Corp ($NASDAQ:PRDO)
Perdoceo Education Corporation is a provider of higher education operating primarily through its two universities, Colorado Technical University and American InterContinental University. The company offers bachelor’s and master’s degrees in a variety of disciplines, including business, computer science, engineering, nursing, and more. Perdoceo Education Corporation is headquartered in Colorado Springs, Colorado.
– Wah Fu Education Group Ltd ($NASDAQ:WAFU)
Wah Fu Education Group Ltd. is a provider of educational services in Mainland China. The Company operates its business through four segments. The Pre-school Education segment offers educational programs and services for children aged three to six. The K-12 Education segment provides educational programs and services for students aged six to 18. The Adult and Other Education segment offers educational programs and services for adults. The International Education segment provides international education programs and services. The Company operates a number of schools, including Wah Fu Kindergarten, Wah Fu Bilingual School, Wah Fu International School and others.
Summary
CHEGG has had disappointing financial performance in the fourth quarter of fiscal year 2022. Total revenue was significantly lower compared to the same quarter in the previous year, at 92.3% lower at USD 1.9 million. Net income was down 1.1% year-on-year to USD 205.2 million.
Investors should consider these numbers when making their investment decisions. The company’s performance should be monitored closely, as any further dips in revenue or income could be indicative of longer-term financial trouble.
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