EPAM - Embedded Expectations Analysis - 2021 06 29
EPAM Systems, Inc. (EPAM:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 66.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about client pricing, employee utilization levels, and their Just-BI acquisitionSpecifically, management may lack confidence in their ability to continue meeting non-GAAP operating income guidance, sustain revenue improvements, particularly for their Life Science & Healthcare segment, and meet growing demand by scaling talent acquisition Moreover, they may be concerned about the impact of wage inflation on pricing for clients, the potential of their Just-BI acquisition, and benefits of their Google Cloud platform collaboration with Equifax. Furthermore, management may lack confidence in their ability to grow their software and high-technology client base, maintain high employee utilization levels, and successfully execute their digitization programs
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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