Campus Expansion In Mexico And Peru Will Elevate Digital Learning

AN
AnalystConsensusTarget
Consensus Narrative from 4 Analysts
Published
10 Sep 24
Updated
07 Aug 25
AnalystConsensusTarget's Fair Value
US$28.00
10.6% undervalued intrinsic discount
07 Aug
US$25.03
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1Y
67.6%
7D
9.3%

Author's Valuation

US$28.0

10.6% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update31 Jul 25
Fair value Increased 5.66%

With both the discount rate and future P/E remaining virtually unchanged, analysts maintained their fair value estimate for Laureate Education at $26.50 per share.


What's in the News


  • Laureate Education, Inc. is expected to report Q2 2025 results on July 31, 2025.

Valuation Changes


Summary of Valuation Changes for Laureate Education

  • The Consensus Analyst Price Target remained effectively unchanged, at $26.50.
  • The Discount Rate for Laureate Education remained effectively unchanged, moving only marginally from 6.86% to 6.85%.
  • The Future P/E for Laureate Education remained effectively unchanged, at 14.98x.

Key Takeaways

  • Expansion in Latin America and digital learning initiatives are driving enrollment growth and diversifying Laureate's student base.
  • Operational efficiency and stronger brand recognition enable improved margins, increased market share, and support for premium pricing.
  • Heavy dependence on Mexico and Peru and rapid online expansion expose Laureate to country and currency risks, squeezed margins, and mounting competition from digital and traditional rivals.

Catalysts

About Laureate Education
    Offers higher education programs and services to students through a network of universities and higher education institutions.
What are the underlying business or industry changes driving this perspective?
  • Ongoing expansion into high-growth Latin American markets (Mexico, Peru) through new campus openings and targeted capacity investments leverages rising demand for private tertiary education, which is likely to drive sustained enrollment and revenue growth over the next several years.
  • Strong momentum in digital learning, particularly the expansion of fully online degree programs for working adults in both Mexico and Peru, broadens Laureate's addressable market and supports accelerated top-line growth by attracting non-traditional students beyond the core undergraduate base.
  • Growing middle class and increasing affordability in key markets underpin robust demand for quality higher education; this supports enrollment growth and provides pricing flexibility, directly benefiting revenue and potentially net margins.
  • Continued operational efficiency initiatives, including campus consolidations and disciplined expense management, are expected to drive further adjusted EBITDA margin improvements, strengthening earnings and cash flow conversion.
  • Enhanced brand recognition and academic quality (e.g., top accreditations, sector-leading rankings) reinforce Laureate's value proposition, helping to capture greater market share and support premium pricing opportunities, positively impacting long-term earnings and margins.

Laureate Education Earnings and Revenue Growth

Laureate Education Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Laureate Education's revenue will grow by 8.4% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 16.4% today to 17.4% in 3 years time.
  • Analysts expect earnings to reach $343.9 million (and earnings per share of $2.16) by about August 2028, up from $254.2 million today.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.3x on those 2028 earnings, down from 14.2x today. This future PE is lower than the current PE for the US Consumer Services industry at 17.4x.
  • Analysts expect the number of shares outstanding to decline by 3.4% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 7.35%, as per the Simply Wall St company report.

Laureate Education Future Earnings Per Share Growth

Laureate Education Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Significant capital spending is required to support new campus expansion in both Mexico and Peru; if actual enrollment and demand fall short of expectations, Laureate may face lower returns on investment and increased fixed costs, negatively impacting margins and free cash flow.
  • Laureate's revenue growth is highly concentrated in Mexico and Peru, exposing the company to substantial country-specific macroeconomic, political, and regulatory risks-future policy changes, trade disruptions, or economic downturns in either market could sharply impact future revenues and earnings stability.
  • While online programs for working adults are growing rapidly, an increasing mix of lower-priced fully online enrollments versus traditional face-to-face programs could pressure blended average tuition rates and result in a slower pace of net revenue and margin growth over time.
  • The company's positive recent results have benefited from a strong Mexican peso; any reversal in FX trends (such as devaluation or macroeconomic shifts) could translate into lower reported revenues and earnings in USD, increasing volatility in financial results.
  • Despite recent efficiency gains and strong brand positions, intensifying competition from both established universities and emerging digital/edtech providers (offering lower-cost or more flexible alternatives) could erode market share and pricing power, ultimately putting pressure on long-term revenue growth and profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of $28.0 for Laureate Education based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $31.0, and the most bearish reporting a price target of just $26.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.0 billion, earnings will come to $343.9 million, and it would be trading on a PE ratio of 13.3x, assuming you use a discount rate of 7.4%.
  • Given the current share price of $24.47, the analyst price target of $28.0 is 12.6% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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