The One Reason To Invest In Covista Stock
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Shares of Covista (CVSA) have fallen 17.1% over the past year, while the S&P 500 returned 16.5%. The company continued to repurchase its own stock, reducing its diluted share count by 21.2% over the three fiscal years to June 2026, so each remaining share now owns a larger slice of the business. So how much has that shrinking share count added to each share’s slice of Covista’s profit?
Covista’s Earnings Per Share Grew Faster Than Its Profit
Over those three years, Covista’s diluted earnings per share grew 50.9% a year, compared with 39.2% a year for its net income. Over the three years combined, that left each share’s slice of the profit about 27% larger than net income growth alone would have made it. This gap comes from the smaller share count: the company divides each dollar of profit among fewer shares, and management said on the August 6, 2026 call that a lower share count is helping earnings per share. Over the twelve months to June 2026, buybacks less the cost of stock pay for employees amounted to 4.6% of Covista’s market value.
A larger slice of the business is worth only what investors will pay for it, and they currently pay less for Covista than for the broader market. Covista stock trades at 17.2 times earnings, against 23.0 for the S&P 500. The number of shares you hold has not changed. Each share’s claim on the profit has grown, but the share price still sets its value.
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Covista Pays For Its Buyback Out Of Spare Cash
Covista generates its spare cash from its schools. Calling itself America’s largest healthcare educator, the company runs three businesses: Walden, Chamberlain, and Medical and Veterinary. Walden grew the fastest in fiscal 2026, with revenue rising 16.1% to $805 million. Across the company, operating profit amounted to 19.9% of revenue over the twelve months to June 2026, against 18.5% for the S&P 500.
Free cash flow, the cash left after capital spending, totaled $393 million over the twelve months to June 2026. That amount was 1.6 times the $240 million Covista spent on buybacks, and the company pays no dividend. Management said $662 million remains under the current repurchase program, enough to buy back about 15% of the company at its October 21, 2026 market value.
What Could Stop Covista From Shrinking Its Share Count?
The threat to the buyback looks like enrollment, not debt. Covista’s net debt equals 1.1 times its EBITDA, its earnings before interest, taxes, depreciation, and amortization, over the twelve months to June 2026. Operating profit covered the interest bill 9.9 times over the same period, so interest takes about a tenth of that profit.
Enrollment is where Covista’s cash begins, and it faces a change in the law. On the August 6 call, management said some fourth-quarter enrollments at its Medical and Veterinary schools reflected students moving ahead of the OB3 loan changes, which are new rules on student loans. The company told investors to treat part of that segment’s extra fourth-quarter growth as a shift between two periods. Management also said it does not anticipate headwinds for any of its programs from those changes, and it expects Chamberlain’s enrollment growth to speed up further in the first quarter of fiscal 2027, after that growth improved from the third quarter to the fourth. Still, Covista expects revenue to grow 5% to 7% in fiscal 2027, after 9.3% in fiscal 2026.
For now, Covista pays for its buybacks out of the cash its schools produce, and that cash comes from the students who sign up. Enrollment growth at Walden and Chamberlain is the number to watch when Covista reports its fiscal first quarter, expected in October 2026.
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