Franklin Covey (FC) Q1 Loss Tests Bullish Turnaround Narrative Despite Low P/S Valuation

Franklin Covey (FC) opened fiscal Q1 2026 with revenue of US$64.0 million and a basic EPS loss of US$0.27, alongside net income excluding extraordinary items of a US$3.3 million loss, setting a cautious tone for the new financial year. The company has seen quarterly revenue move from US$69.1 million in Q1 2025 to US$84.1 million in Q4 2024 and US$64.0 million in Q1 2026, while basic EPS has ranged from a profit of US$0.92 in Q4 2024 to a loss of US$0.27 in the latest quarter, which puts the spotlight firmly on how management can protect and rebuild margins from here.

See our full analysis for Franklin Covey.

With the headline numbers on the table, the next step is to see how this mix of revenue, losses and trailing results lines up against the widely followed turnaround and growth narratives around Franklin Covey.

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Trailing 12 Months Still in the Red

• On a trailing 12 month basis to Q1 2026, Franklin Covey booked US$262.0 million in revenue and a net loss of US$1.4 million, compared with US$287.2 million of revenue and US$23.4 million of net income in the period ending Q4 2024.
• Consensus narrative points to high client retention and growing Education demand as supports for margins, yet the move from US$23.4 million of trailing net income in Q4 2024 to a US$1.4 million trailing loss by Q1 2026 shows earnings have not lined up with that more optimistic view.
  • The consensus view highlights contract renewals and higher average revenue per client, while the data shows trailing revenue has shifted from US$287.2 million to US$262.0 million across the same comparison.
  • The strong focus on content and technology investment mentioned in the consensus narrative also ties to current losses, because the Q1 2026 period shows a net loss of US$3.3 million despite quarterly revenue of US$64.0 million.

Valuation Gap vs DCF Fair Value

• Against a share price of US$17.91, the data shows a DCF fair value of US$70.57, which is a very large gap between price and that model value, and sits alongside a low P/S of 0.8x versus 1.3x for the US Professional Services industry and 7.2x for peers.
• Bulls argue that high renewal rates and expanded deal sizes justify a higher valuation, and the combination of a low 0.8x P/S and the DCF fair value of US$70.57 heavily supports that bullish case on paper.
  • The bullish narrative talks about improved adjusted EBITDA and cash flow from contract renewals, while the trailing numbers still show a modest US$1.4 million loss, so the valuation argument leans more on future expectations than current profit.
  • Analysts also expect earnings growth that is described as very large each year with a return to profitability within three years, which is a key assumption behind that US$70.57 DCF fair value despite the most recent quarter showing a US$0.27 loss per share.

In a market that prices Franklin Covey at US$17.91, bulls point to the 0.8x P/S and US$70.57 DCF fair value gap as the real story to watch. 🐂 Franklin Covey Bull Case

Turnaround Story vs Recent Losses

• The company recorded a US$3.3 million loss in Q1 2026, and the latest trailing 12 month EPS of US$0.11 loss contrasts with analyst expectations of earnings reaching US$15.6 million and EPS of US$1.14 by around 2028, alongside forecast revenue growth of 3.6% a year compared with a 10.5% forecast for the broader US market.
• Bears focus on that earnings gap and the slower 3.6% revenue growth forecast, arguing it could be hard to reach the projected US$15.6 million of earnings and an implied 26.7x P/E in 2028 if the business continues to post quarterly losses like the US$3.3 million loss in Q1 2026.
  • The bearish view also flags that trailing revenue has stepped down from US$287.2 million to US$262.0 million while the company is still spending on roughly US$16 million of growth initiatives, which impacts current margins.
  • At the same time, the data shows no substantial insider selling and losses narrowing by 8.6% per year over five years, so the trend in losses partly softens the concern that current trailing losses alone invalidate the turnaround case.

Skeptics question whether a business with a US$1.4 million trailing loss can realistically support a 26.7x P/E on 2028 earnings. 🐻 Franklin Covey Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Franklin Covey on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers differently? Put your own spin on Franklin Covey's story in just a few minutes and turn that view into a clear, shareable thesis with Do it your way

A great starting point for your Franklin Covey research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

Franklin Covey's turnaround story is still wrestling with a trailing US$1.4 million loss, quarterly losses like Q1 2026, and softer trailing revenue.

If those patchy results leave you wanting steadier progress, check out stable growth stocks screener (2142 results) to focus on companies with more consistent revenue and earnings trends across different periods.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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