EPAM - Embedded Expectations Analysis - 2019 07 24
EPAM Systems (EPAM:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 31.6x Uniform P/E, implying fairly bullish expectations for the firm. However, management has concerns about EPS, customer demand, and revenue growth.Specifically, management may lack confidence in their ability to drive further EPS growth, and may have concerns about recent DSO increases. Furthermore, they may lack confidence in their ability to drive incremental revenue from new customer engagements and in their ability to meet interest income expectations through the remainder of the year. Additionally, they may be exaggerating optimism related to first quarter performance, and may be downplaying concerns about decreasing demand across their customers. Finally, management may be concerned about the sustainability of recent levels of demand for their payment processing and insurance products, and appear concerned about continued slowdowns in revenue per head count growth.
Epam Systems is a provider of software product development and digital platform engineering services to customers located around the world, primarily in North America, Europe, Asia and Australia. The company's industry services include financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, as well as other industries.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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