ACAD.ST — mttssn research

HOLD

Conviction: MEDIUM

Northern Europe's largest education provider (preschools, schools, adult/vocational) — defensive, publicly-funded, cash-generative (14% FCF yield) — but reported sub-WACC on a lease-heavy (IFRS-16) capital base, with regulatory (Swedish free-school) overhang. HOLD.

Adj. ROIC

7.7%

WACC 8% → spread -0.3pp

Economic Profit

SEK -56M

−SEK 56M (IFRS-16 lease-heavy IC)

FCF Yield

14.1%

14% FCF yield

Price / Target

SEK 105 → SEK 105

+0% base; HOLD

Revenue (LTM)

SEK 19.0B

LTM; preschool/school/adult ed

EBIT Margin

9.2%

GAAP; publicly-funded

EV / IC

1.21×

Enterprise value / invested capital

Net Debt

SEK 11.3B

SEK 11.3B (lease-heavy)

Thesis

AcadeMedia is Northern Europe's largest independent education provider — preschools, compulsory and upper-secondary schools, and adult/vocational education across Sweden, Norway, Germany and the Netherlands. It is defensive (largely publicly-funded) and cash-generative (14% free-cash yield), but adjusted ROIC of 7.7% reads below the 8% WACC — partly because IFRS-16 capitalises a large property-lease base, inflating invested capital.

The equity at SEK 105 embeds ~9.5% perpetual growth (reverse-DCF, ~42% below). Defensive funding and cash flow are the support; the Swedish free-school political debate and lease-heavy economics are the cautions.

Valuation · reverse-DCF & scenarios

Reverse-DCF fair value runs ~SEK 55–61 across scenarios — below the SEK 105 price; the lease-heavy IC depresses the reported ROIC and EP. The defensive, publicly-funded cash flows support a premium to the harsh read.

Base SEK 105 (flat); bull SEK 130 (enrolment growth + margin + benign regulation); bear SEK 80 (adverse Swedish free-school regulation or funding pressure).

Market-implied growth

≥7.3%

model ceiling — EV implies more than constant-ROIC sustains

No-growth value / share

SEK 60

58% of price; rest = priced-in growth

ROIC − WACC

-0.3 pp

ROIC 7.7% vs WACC 8.0% — positive = value creation

CAP (priced-in)

n/a

years of excess returns the price implies (fades to WACC)

At today’s enterprise value the constant-ROIC reverse-DCF maxes out: even at its sustainable-growth ceiling (~7.3%, limited by ROIC 8% ≈ WACC 8%) it cannot reach the current EV. No-growth value is SEK 60/share (58% of price); the market prices in growth and/or a higher ROIC than booked — richly valued on this lens. Read the sensitivity grid.

Scenario	24m target	Impl. g	Upside	Prob.	Driver
Bull	SEK 130	≥7%	+24%	30%	Enrolment growth + margin + benign regulation
Base	SEK 105	≥7%	+0%	45%	Defensive cash flows; lease-heavy reported returns
Bear	SEK 80	≥7%	-24%	25%	Adverse Swedish free-school regulation
Prob-weighted	SEK 106	—	+2%	100%	Scenario-weighted expected value

Sensitivity — fair value / share at WACC × growth

WACC \ g	0%	3%	5%	8%	10%	15%
6.50%	119	128	133	141	146	155
7.25%	85	89	91	93	93	91
8.00% (base)	60	61	60	58	56	45
8.75%	42	39	37	32	27	11
9.50%	27	22	19	11	5	-15

Green = fair value above the current price of SEK 104.60. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.

Method & data. NOPAT SEK 1,380, invested capital and ROIC 7.7% are observed (adjustments.json); WACC 8.0% and terminal g 2.5% are assumptions. EV→equity uses net debt SEK 11,332. The model holds ROIC constant (no fade) over the explicit horizon; the CAP figure instead fades excess returns to WACC.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Defensive, publicly-funded

Largely tax-funded education demand is recession-resilient.

2. Scale leadership

The largest independent provider — scale and quality advantages.

3. Demographic/enrolment growth

Population and enrolment growth underpin demand.

4. High free cash flow

14% free-cash yield supports distributions/reinvestment.

5. International expansion

Growth in Germany/Netherlands diversifies regulatory exposure.

Key risks

Swedish free-school regulationThe political debate over for-profit free schools/funding is the dominant overhang.
Lease-heavy economicsIFRS-16 property leases inflate IC and depress reported returns.
Funding/politicalPer-student funding decisions drive margins.
Full valuationPrice embeds ~9.5% growth on the harsh reverse-DCF read.
Teacher cost/supplyWage and staffing pressures affect margins.

Conclusion

AcadeMedia is a defensive, cash-generative education leader whose reported sub-WACC returns reflect a lease-heavy base, under a Swedish-regulation overhang. HOLD, medium conviction; base target SEK 105 (flat).

Enrolment growth plus benign regulation is the upside; adverse Swedish free-school regulation is the principal risk.