HMHC - Improving Economics And Industry Dynamics May Enable Houghton Mifflin Harcourt To Re-Rate Further

• In recent years, migration from physical purchases to recurring, higher margin online services have benefitted many industries. The same shift is happening in U.S. K-12 educational materials.
• The industry appears oligopolistic, Houghton Mifflin Harcourt is benefitting and may capture excess returns for the longer term that entrants may find hard to compete away.
• While the stock has had a strong run, there is likely still some upside on the table as the market fully digests HMHC's favorable positioning and economics.
• If HMHC can sustain 2021's likely performance into future years, then there may be 70%-160% upside to more of a market multiple and that valuation may still prove conservative if financials improve further.

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