Oregon-based childcare chain KinderCare Learning Companies has filed for an IPO and will list on the NYSE under the ticker symbol “KLC”. What's the stock's forecast after the IPO? Should you buy KinderCare IPO stock?
KinderCare provides early childhood education and care services in the U.S. The company has a child capacity of more than 195,000 children. KinderCare has received more than $400 million in equity investments from Partners Group Holding AG.
KinderCare's IPO date and price
KinderCare hasn’t specified its IPO date yet, but it's expected to list on Nov. 18. The company has kept the IPO price between $18 and $21, and the final pricing will be announced later.
KinderCare plans to offer 25.8 million shares as part of the IPO, and the underwriters have an option to buy another 3.9 million shares. The company will gross over $624 million from the offering at the upper range if the underwriters fully exercise their option. KinderCare intends to use the proceeds to repay debt and for general corporate purposes.
KinderCare's IPO valuation
KinderCare reported revenue of $1.3 billion in the first nine months of 2021, marking a rise of about 35.2 percent YoY (year-over-year). The company’s revenue fell by 27.1 percent YoY in 2020. KinderCare had net income of $41.5 million in the first nine months of 2021, up YoY from a net loss of $97.1 million.
KinderCare is seeking a valuation of about $2.9 billion. Based on its pro forma market cap, KinderCare's 2020 price-to-sales multiple is 2.1x. To compare, child care provider Bright Horizons Family Solutions has a next-12-month EV-to-sales multiple of 4.8x.
KinderCare stock’s forecast
KinderCare claims in its filings that over 17.5 million employees, or 20 percent of the American workforce, depend on childcare on a daily basis. The U.S. market for private spending on education-focused care for children aged zero to five was $15.2 billion in 2019, according to the Bureau of Economic Research. Between 2021 and 2026, the market is expected to grow 6.4 percent compounded annually, excluding any impact from federal stimulus.
According to Fatpos Global, the global market for early childhood education is expected to grow 1.03 percent compounded annually between 2021 and 2030, and reach $615 billion.
Should you buy KinderCare IPO stock?
KinderCare serves children from 6 weeks to 12 years of age. It runs around 1,490 early childhood education centers under the KinderCare brand in 40 states and the District of Columbia. The company uses a consistent curriculum and operational strategy at its centers. The preference for flexible early childhood education centers is being driven by evolving work styles, and there appears to be room for expansion for quality childcare providers.
Overall, KinderCare has recovered significantly from the 2020 COVID-19 pandemic period, and the IPO looks to be reasonably valued, so it’s worth a close look.
How to buy KinderCare IPO stock
You'll be able to buy KinderCare stock through various brokerages after it begins trading publicly, including Robinhood.