BFAM – Market expectations are for Uniform ROA to expand, but management may have concerns about growth, pandemic impacts, and labor pressures

April 27, 2022

  • Bright Horizons Family Solutions (BFAM) currently trades above corporate and historical averages relative to Uniform earnings, with a 38.0x Uniform P/E (Fwd. V/E’).

  • At these levels, markets are pricing in expectations for Uniform ROA to expand to 18%, accompanied by 7% Uniform asset growth.

  • Meanwhile, analysts expect Uniform ROA to improve to 14% in 2023, accompanied by 9% Uniform asset growth.

  • If sustained going forward, these levels would imply a stock price closer to $98, representing approximately 22% equity downside for the firm.

  • Moreover, the firm’s most recent earnings call suggests management may have concerns about growth, pandemic impacts, and labor pressures.

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