Financial Analysis: Chegg (CHGG) versus The Competition

Chegg (NYSE: CHGG) is one of 42 publicly-traded companies in the “Educational services” industry, but how does it contrast to its peers? We will compare Chegg to similar businesses based on the strength of its earnings, analyst recommendations, risk, profitability, institutional ownership, dividends and valuation.

Analyst Recommendations

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This is a breakdown of recent ratings for Chegg and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chegg 0 4 7 0 2.64
Chegg Competitors 132 606 694 12 2.41



Chegg presently has a consensus target price of $19.70, indicating a potential downside of 12.75%. As a group, “Educational services” companies have a potential upside of 5.77%. Given Chegg’s peers higher possible upside, analysts plainly believe Chegg has less favorable growth aspects than its peers.

Profitability

This table compares Chegg and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chegg -7.95% -2.37% -1.97%
Chegg Competitors -14.47% -23.11% -6.46%

Valuation & Earnings

This table compares Chegg and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Chegg $255.07 million -$20.28 million -250.89
Chegg Competitors $515.82 million $30.04 million 17.54

Chegg’s peers have higher revenue and earnings than Chegg. Chegg is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Insider & Institutional Ownership

53.7% of shares of all “Educational services” companies are held by institutional investors. 20.4% of Chegg shares are held by insiders. Comparatively, 23.7% of shares of all “Educational services” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

Chegg has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500. Comparatively, Chegg’s peers have a beta of 0.81, suggesting that their average share price is 19% less volatile than the S&P 500.

Summary

Chegg peers beat Chegg on 7 of the 13 factors compared.

Chegg Company Profile

Chegg, Inc. is a student-first connected learning platform. The Company helps students study for college admission exams, find the colleges, get grades and test scores while in school, and find internships that allow them to gain skills to help them enter the workforce after college. The Company matches domestic and international students with colleges, universities and other academic institutions (collectively referred to as colleges) in the United States. It also offers eTextbooks library for rent and sale. The Company also has live tutors on its connected learning platform available to students online, anytime, anywhere through its Chegg Tutors service. It provides access to internships to help students gain skills that are critical to securing their first job. It offers two product lines: Required Materials and Chegg Services. The Required Materials product line includes the rental and sale of print textbooks and eTextbooks, as well as the commission it receives from Ingram.

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