John Leonard, CFA
Special situations, micro-cap, contrarian, CFA

Temporary Headwinds Mask Significant Earnings Power At Learning Tree International

Executive summary:

    The market assumes that the current cyclical low for Learning Tree International (NASDAQ:LTRE) is permanent and ignores the primary catalyst in the form of a significant EBITDA rebound over the intermediate term driven by receding negative external factors, a lower cost structure and continued operational improvements. This mispricing is compounded by the low demand visibility and lack of analyst coverage. Moreover, the market has failed to differentiate between weaker and more visible for-profit education providers and stronger and more focused providers with unique demand drivers such as LTRE. The downside is limited by the high net cash balance (no debt) that represents 70% of the market cap while two secondary catalysts (e.g. another MBO attempt or ...
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