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Bright Horizons (BFAM)
NYSE:BFAM
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Bright Horizons
(NYSE:BFAM)70Outperform
Positive Factors
Financial Performance
4Q24 results beat consensus expectations driven by better-than-expected BUCA and segment mix.
Market Position
Bright Horizons is considered a clear market leader in a network effect business with a good value proposition and differentiated delivery capabilities for employer sponsors.
Negative Factors
Growth Challenges
Deceleration of top line growth positions '25 to be a challenging year for BFAM.
Bright Horizons (BFAM) vs. S&P 500 (SPY)
Market Cap
$7.30B
Dividend YieldN/A
Average Volume (3M)474.02K
Price to Earnings (P/E)53.0
Beta (1Y)0.76
Revenue Growth11.07%
EPS Growth88.57%
CountryUS
Employees31,400
SectorConsumer Cyclical
Sector Strength53
IndustryPersonal Services
Share Statistics
EPS (TTM)2.40
Shares Outstanding57,354,220
10 Day Avg. Volume437,549
30 Day Avg. Volume474,023
Financial Highlights & Ratios
PEG Ratio0.60
Price to Book (P/B)N/A
Price to Sales (P/S)2.72
Price to Cash Flow (P/CF)15.10
P/FCF Ratio15.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$137.89Price Target Upside8.40% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Bright Horizons Business Overview & Revenue Model
Company DescriptionBright Horizons Family Solutions Inc. (BFAM) is a leading provider of high-quality child care, early education, and work/life solutions. Founded in 1986 and headquartered in Newton, Massachusetts, the company operates in the education sector, offering services that include employer-sponsored child care, back-up care, educational advisory services, and other family support solutions. Bright Horizons is dedicated to helping employers support their employees by providing reliable family care services that enhance productivity and well-being.
How the Company Makes MoneyBright Horizons generates revenue primarily through its three key segments: full-service center-based child care, back-up care, and educational advisory services. The full-service child care segment involves operating centers that provide daily child care and early education programs, often funded or subsidized by corporate clients who offer these services as a benefit to their employees. The back-up care segment provides short-term, emergency care solutions for children and adults, helping employees manage disruptions in regular care arrangements. The educational advisory services segment offers guidance and support for employees' educational needs, including college admissions consulting and tuition assistance programs. Revenue is driven by long-term contracts with corporate clients, who value these services as part of their employee benefits packages, enhancing retention and satisfaction. Additionally, Bright Horizons benefits from partnerships with various companies and educational institutions to expand its service offerings and client base.
Bright Horizons Financial Statement Overview
Summary
Bright Horizons has demonstrated strong financial performance with solid revenue and profit growth, improved margins, and enhanced cash flows in 2024. The balance sheet shows improving leverage and equity position. However, there is room for improvement in return on equity and free cash flow conversion.Income Statement
The company has demonstrated strong revenue growth with a 11.08% increase from 2023 to 2024. Gross profit margin improved to 23.06% in 2024 from 21.60% in 2023, indicating better cost management. Net profit margin is healthy at 5.22%, up from 3.06% in 2023. EBIT and EBITDA margins also improved, reflecting enhanced operational efficiency. Overall, the income statement shows positive growth and improved profitability.78
Positive
Balance Sheet
The debt-to-equity ratio has decreased to 0.68 in 2024 from 1.53 in 2023, indicating an improved leverage position. The equity ratio increased to 33.20%, reflecting a stronger equity base. However, the return on equity is moderate at 10.97%, suggesting room for improvement in generating returns for shareholders. Overall, the balance sheet shows strengthening equity but needs further enhancement in return metrics.65
Positive
Cash Flow
Operating cash flow increased significantly by 31.75% from 2023 to 2024. Free cash flow grew by 46.65%, indicating better cash management. The operating cash flow to net income ratio is robust at 2.41, showing strong cash generation relative to earnings. However, free cash flow to net income is slightly lower at 1.73, suggesting a need for continued focus on cash retention. Overall, cash flow performance is solid with strong growth in operating and free cash flows.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.69B | 2.42B | 2.02B | 1.76B | 1.52B | Gross Profit |
| 619.61M | 522.23M | 478.65M | 415.01M | 304.55M | EBIT |
| 246.62M | 160.49M | 157.59M | 129.02M | 53.33M | EBITDA |
| 344.54M | 281.92M | 265.27M | 230.35M | 165.00M | Net Income Common Stockholders |
| 140.19M | 74.05M | 80.64M | 70.46M | 26.99M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 122.03M | 93.57M | 36.22M | 260.98M | 384.34M | Total Assets |
| 3.85B | 3.90B | 3.80B | 3.64B | 3.73B | Total Debt |
| 874.15M | 1.86B | 1.97B | 1.78B | 1.85B | Net Debt |
| 763.83M | 1.79B | 1.93B | 1.52B | 1.46B | Total Liabilities |
| 2.57B | 2.68B | 2.72B | 2.46B | 2.44B | Stockholders Equity |
| 1.28B | 1.21B | 1.08B | 1.18B | 1.28B |
| Cash Flow | Free Cash Flow | |||
| 240.15M | 165.12M | 128.46M | 169.59M | 136.74M | Operating Cash Flow |
| 337.46M | 256.14M | 188.47M | 227.25M | 209.57M | Investing Cash Flow |
| -117.76M | -126.94M | -278.05M | -117.39M | -83.83M | Financing Cash Flow |
| -183.81M | -91.63M | -121.34M | -230.03M | 229.00M |
Bright Horizons Technical Analysis
Positive
127.20
Price Trends
120.15
Positive
119.52
Positive
121.50
Positive
Market Momentum
2.32
Positive
55.01
Neutral
68.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BFAM, the sentiment is Positive. The current price of 127.2 is above the 20-day moving average (MA) of 126.12, above the 50-day MA of 120.15, and above the 200-day MA of 121.50, indicating a bullish trend. The MACD of 2.32 indicates Positive momentum. The RSI at 55.01 is Neutral, neither overbought nor oversold. The STOCH value of 68.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BFAM.
Bright Horizons Risk Analysis
Bright Horizons disclosed 28 risk factors in its most recent earnings report. Bright Horizons reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Bright Horizons Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $3.38B | 16.93 | 14.63% | ― | 12.83% | 97.16% | |
75 Outperform | $5.37B | 20.60 | 22.95% | ― | 13.13% | 56.75% | |
74 Outperform | $8.03B | 20.88 | 10.40% | ― | 34.42% | 28.54% | |
72 Outperform | $4.05B | 5.72 | 17.48% | 0.74% | 8.52% | 281.17% | |
70 Outperform | $7.30B | 52.98 | 11.26% | ― | 11.07% | 88.57% | |
70 Outperform | $4.90B | 22.04 | 30.13% | ― | 7.50% | 13.70% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
BFAM
Bright Horizons
127.20
10.74
9.22%
ATGE
Adtalem Global Education
90.82
40.73
81.31%
LOPE
Grand Canyon Education
170.53
37.47
28.16%
LRN
Stride
123.22
61.97
101.18%
EDU
New Oriental Education Tech
49.22
-38.94
-44.17%
GHC
Graham Holdings
934.33
217.34
30.31%
Bright Horizons Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: 6.90% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong overall performance with record-breaking revenue and earnings growth driven by the Backup Care segment. However, challenges remain in improving occupancy rates and performance in certain underperforming centers. The 2025 outlook is positive, with expected revenue and EPS growth, but some headwinds from net center closures and enrollment issues persist.Highlights
Record Revenue and Earnings Growth
Total revenue increased by 11% for the year, with adjusted EPS growing by 22%, significantly surpassing initial projections.
Backup Care Segment Performance
The Backup Care segment generated $170 million of EBIT, with revenue growth of 15% in Q4 to $157 million, and annual revenue topping $600 million.
Full Service Child Care Expansion
Seven centers were added in Q4, including client centers for Ragon Institute and St. Jude's Hospital. For the full year, 26 centers were opened.
Strong UK Market Improvement
The UK operations showed improved financial performance, narrowing losses compared to the previous year, and is on track to reach earnings breakeven in 2025.
Cash Flow and Share Repurchase
Cash from operations increased to $337 million in 2024, with $85 million of stock repurchased in Q4.
Positive 2025 Outlook
2025 revenue is projected to be $2.85 billion to $2.9 billion, with adjusted EPS expected to grow by 15% to 20%.
Lowlights
Underperformance in Certain Child Care Centers
The pace of growth in underperforming centers remains below expectations, particularly in business districts of D.C., New York City, and Seattle.
Enrollment Challenges
Average occupancy remained in the low 60s, with the most underperforming centers still below 40% occupancy.
Net Center Closures
16 locations were closed in Q4, with a net closure effect expected to be a headwind to 2025 revenue growth.
Company Guidance
During Bright Horizons Family Solutions' fourth-quarter 2024 earnings call, the company provided guidance for 2025, anticipating total revenue between $2.85 billion and $2.9 billion, which reflects a growth rate of 6% to 8%. They expect adjusted EPS to range from $3.95 to $4.15 per share, representing a 15% to 20% increase. The Full Service Child Care segment is projected to see revenue growth of 4.5% to 6.5%, while the Backup Care segment is forecasted to grow 11% to 13%, driven by increased adoption among eligible employees. Additionally, the company expects mid-single-digit growth in the Education Advisory segment. They plan to continue efforts to improve enrollment rates, particularly in underperforming centers, and foresee the UK operations reaching breakeven status by the end of 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.