Laureate Education, Inc. (LAUR), an international network of higher education institutions, reported strong operating performance in the second quarter of 2024, with a strong focus on returning capital to shareholders through significant buybacks of part. The company maintained its full-year 2024 earnings and adjusted EBITDA guidance, expecting significant margin expansion in the second half of the year. The growth of the private higher education market in Mexico and the recovery in Peru reinforce the company’s positive outlook. Laureate’s commitment to academic excellence and innovation, along with a strong balance sheet and cash flow generation, supports its growth strategy in these regions.
Strengths
- Laureate Education is on track to meet its 2024 commitments and delivered solid operating performance in the second quarter.
- The company reported revenue and adjusted EBITDA growth in both Mexico and Peru.
- Full-year 2024 revenue and adjusted EBITDA forecasts remain unchanged, with margin expansion expected.
- The share repurchase program continues, with $72 million of shares repurchased in the first half of the year.
- Laureate plans further product innovations and campus expansion in growth markets.
Company perspectives
- Laureate expects 4%-5% growth in total enrollment over the past year.
- Revenue is expected to increase 5%-6%, while adjusted EBITDA will grow 5%-8% year over year.
- The company expects an adjusted EBITDA at an unlevered free cash flow conversion rate of 30% for 2024.
- Third quarter revenue is estimated to be between $358 million and $362 million, with adjusted EBITDA of approximately $69 million to $73 million.
Bearish highlights
- A one-time payment of $45 million is expected for deferred taxes.
- Lease exit costs will impact third quarter financials.
Bullish strengths
- Revenue in Mexico grew 10% in the second quarter, while revenue in Peru saw a 5% increase.
- The company expects higher growth in Peru by 2025.
- Laureate benefits from a profitable and low-cost business model, with strong cash flow.
loss
- There were no significant losses during the phone call announcing the results.
Highlights from the questions and answers
- Rick Buskirk cited reduced attrition and favorable timing of revenues and expenses as reasons for beating forecasts.
- Eilif Serck-Hanssen commented on the dynamics of the Mexican market, underlining the political priorities of the new administration that align with Laureate’s strategic goals.
Laureate Education is poised to take advantage of favorable market conditions in Mexico and Peru. The company’s strategic focus on innovation and expansion, combined with a strong financial foundation, is well positioned to capitalize on opportunities in the private higher education sector. With a clear plan to grow its presence and offering in these key markets, Laureate Education is confident in its ability to continue to deliver value to its shareholders and students.
Insights from InvestingPro
Laureate Education, Inc. (LAUR) showed a strong financial position in the second quarter of 2024, highlighted by key metrics indicating a favorable investment landscape. According to InvestingPro data, the company boasts a market capitalization of $2.19 billion, reflecting its significant presence in the higher education sector. Investors may find the company’s P/E ratio of particular interest, which, at 11.23, suggests the stock is trading at a low price relative to near-term earnings growth, a tip from InvestingPro that highlight the potential value for those analyzing the entry point in the stock.
Another notable metric is the company’s PEG ratio, which over the past twelve months, as of Q2 2024, recorded a very low value of 0.11. This figure, which measures a stock’s P/E ratio relative to its growth, suggests that Laureate may be undervalued based on its earnings trajectory. Additionally, Laureate’s revenue growth of 13.59% over the same period shows a steady upward trend, further bolstering the company’s growth narrative.
InvestingPro tips also show that Laureate operates with a moderate level of debt and that its cash flows adequately cover interest payments, which is a reassuring sign for concerned investors. about financial stability. Furthermore, analysts expect the company to be profitable this year and has been profitable for the past twelve months.
For investors who want more detailed analysis and additional insight, more investment tips are available at https://www.investing.com/pro/LAUR InvestingProwhich offers a comprehensive guide to Laureate Education’s financial health and future prospects.
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