Adversity is less terrifying than hope: Chegg Inc. (CHGG)

Chegg Inc. (NYSE: CHGG) stock jumped 2.32% on Wednesday to $9.69 against a previous-day closing price of $9.47. With 2.6 million shares changed hands, the volume of the stock remained lighter than its average volume of 4.54 million shares. During the session, the Education & Training Services company that operates in wider Consumer Defensive sector, reached to the highest price of $9.71 whereas the lowest price it dropped to was $9.33. The 52-week range on CHGG shows that it touched its highest point at $30.05 and its lowest point at $8.72 during that stretch. It currently has a 1-year price target of $14.95. Beta for the stock currently stands at 1.19.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of CHGG was up-trending over the past week, with a rise of 5.90%, but this was down by -46.35% over a month. Three-month performance dropped to -38.63% while six-month performance fell -66.13%. The stock lost -47.39% in the past year, while it has lost -61.65% so far this year. A look at the trailing 12-month EPS for CHGG yields 1.80 with Next year EPS estimates of 1.17. For the next quarter, that number is 0.29. This implies an EPS growth rate of -16.20% for this year and 7.71% for next year. EPS is expected to grow by 20.00% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 60.60%.

Float and Shares Shorts:

At present, 123.71 million CHGG shares are outstanding with a float of 116.63 million shares on hand for trading. On Apr 27, 2023, short shares totaled 10.27 million, which was 8.58% higher than short shares on Mar 30, 2023. In addition to Mr. Daniel Lee Rosensweig as the firm’s Co-Chairman, CEO & Pres, Mr. Andrew J. Brown serves as its Chief Financial Officer.

Institutional Ownership:

Through their ownership of 100.45% of CHGG’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 53.47% of CHGG, in contrast to 37.76% held by mutual funds. Shares owned by individuals account for 32.18%. As the largest shareholder in CHGG with 10.64% of the stake, Baillie Gifford & Co. holds 13,459,662 shares worth 13,459,662. A second-largest stockholder of CHGG, The Vanguard Group, Inc., holds 12,147,538 shares, controlling over 9.60% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in CHGG, holding 7,897,895 shares or 6.24% stake. With a 5.16% stake in CHGG, the American Funds AMCAP Fund is the largest stakeholder. A total of 6,530,000 shares are owned by the mutual fund manager. The Vanguard US Growth Fund, which owns about 3.54% of CHGG stock, is the second-largest Mutual Fund holder. It holds 4,479,599 shares valued at 80.54 million. Vanguard Total Stock Market ETF holds 2.97% of the stake in CHGG, owning 3,754,410 shares worth 67.5 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Mar 30, 2023, CHGG reported revenue of $194.72M and operating income of $7.34M. The EBITDA in the recently reported quarter was $29.27M and diluted EPS was $0.06.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for CHGG since 0 analysts follow the stock currently. In the same way, a target price assigned to a stock can also reveal much about its potential. With CHGG analysts setting a high price target of $18.00 and a low target of $11.00, the average target price over the next 12 months is $13.60. Based on these targets, CHGG could surge 85.76% to reach the target high and rise by 13.52% to reach the target low. Reaching the average price target will result in a growth of 40.35% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy.

Summary of Insider Activity:

Insiders traded CHGG stock several times over the past three months with 9 Buys and 24 Sells. In these transactions, 566,789 shares were bought while 117,937 shares were sold. The number of buy transactions has increased to 19 while that of sell transactions has risen to 58 over the past year. The total number of shares bought during that period was 670,841 while 271,833 shares were sold.

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