EPAM - Embedded Expectations Analysis - 2021 03 31
EPAM Systems, Inc. (EPAM:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 54.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their revenue growth, gross margins, and expansion investmentsSpecifically, management may lack confidence in their ability to maintain rapid growth, execute as an IT strategy and implementation partner for Epic Games, and design product management solutions for clients. In addition, they may have concerns about margin headwinds from their growth investments and their entry into new markets in Eastern Europe. Furthermore, they may lack confidence in their ability to sustain sales growth from new work and existing clients and achieve their income from operations targets. Also, they may be concerned about their revenue mix, the impact of FX rates on their revenue growth, and the sustainability of IT investments from retailer and consumer goods clients
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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