LAUR - Embedded Expectations Analysis - 2020 08 18
Laureate Education, Inc. (LAUR:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 66.6x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about revenue growth, digital learning offerings, and enrollment demandSpecifically, management may lack confidence in their ability to grow revenue and EBITDA, complement real-time instruction with digital instruction, and compete in Brazil's digital learning market. Furthermore, they may be exaggerating the macro resiliency of the business and their ability to provide differentiated and highly competitive online offerings, and they may be concerned about re-enrollment weakness during the pandemic. In addition, management may lack confidence in their ability to capture pent-up enrollment demand and they may be downplaying concerns about new overseas enrollments
Laureate Education is engaged in providing higher education programs and services to students through an international network of licensed universities and higher education institutions (institutions). The company's programs are provided through institutions that are campus-based and internet-based, or through electronically distributed educational programs. The company has five reportable segments: Brazil; Mexico; Andean; Rest of World; and Online and Partnerships. The company's Online and Partnerships segment principally consists of Walden University.
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
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