EPAM - Embedded Expectations Analysis - 2021 09 13
EPAM Systems, Inc. (EPAM:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 72.0x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about revenues, their end-to-end solutions, and the sustainability of demand.Specifically, management may lack confidence in their ability to meet their operating income targets, maintain their day sales outstanding (DSO) levels, and achieve their Q3 revenue goal. Also, they may lack confidence in their ability to help clients with both strategy and implementations simultaneously and capitalize on opportunities within the strong demand environment. In addition, they may have concerns about the sustainability of demand for application development along with cloud and data integration services, the significance of their end-to-end solution updates, and the strength of their recruiting pipeline.
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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