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Bright Horizons (BFAM)
NYSE:BFAM
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Bright Horizons
(NYSE:BFAM)
75Outperform
Positive Factors
Business Outlook
First-time 2025E revenue guidance of $2.85B-$2.9B is in line with consensus, showing positive outlook.
Earnings Performance
Outsized margins led to double-digit EPS beat.
Financial Management
BFAM paid down $49.5M in debt and repurchased ~$20M in stock.
Negative Factors
Growth Challenges
Enrollment growth estimates were lowered by 50bps.
Market Performance
BFAM underperformed the market by 570 bps in '24, attributable to its disappointing results and outlook in 3Q earnings.
Valuation Concerns
BFAM is considered expensive at ~19x NTM EV/EBITDA vs. pre-COVID average of ~17x, especially as enrollment has not been able to recover at the expected pace.
Bright Horizons (BFAM) vs. S&P 500 (SPY)
Market Cap
$6.96B
Dividend YieldN/A
Average Volume (3M)447.94K
Price to Earnings (P/E)43.8
Beta (1Y)0.76
Revenue Growth9.71%
EPS Growth94.22%
CountryUS
Employees32,050
SectorConsumer Cyclical
Sector Strength61
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)0.77
Shares Outstanding57,378,105
10 Day Avg. Volume372,669
30 Day Avg. Volume447,939
Financial Highlights & Ratios
PEG Ratio2.84
Price to Book (P/B)5.29
Price to Sales (P/S)0.00
P/FCF Ratio32.69
Enterprise Value/Market Cap1.12
Enterprise Value/Revenue0.73
Enterprise Value/Gross Profit12.24
Enterprise Value/Ebitda5.78
Forecast
1Y Price Target
$139.00Price Target Upside13.91% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Bright Horizons Business Overview & Revenue Model
Company DescriptionBright Horizons Family Solutions Inc. provides early education and child care, back-up care, educational advisory, and other workplace solutions services for employers and families. The company operates through three segments: Full Service Center-Based Child Care, Back-Up Care, and Educational Advisory and Other Services. The Full Service Center-Based Child Care segment offers traditional center-based child care and early education, preschool, and elementary education services. The Back-Up Care segment provides center-based back-up child care, in-home child and adult/elder dependent care, school-age camps, virtual tutoring, and self-sourced reimbursed care services through child care centers, school-age campuses, and in-home caregivers, as well as the back-up care network. The Educational Advisory and Other Services segment offers tuition assistance and student loan repayment program administration, workforce education, and related educational consulting services, as well as college admissions advisory services. As of December 31, 2021, it operated 1,014 child care and early education centers in the United States, Puerto Rico, the United Kingdom, Canada, the Netherlands, and India. The company was formerly known as Bright Horizons Solutions Corp. and changed its name to Bright Horizons Family Solutions Inc. in July 2012. Bright Horizons Family Solutions Inc. was founded in 1986 and is headquartered in Newton, Massachusetts.
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 shows strong revenue and profit growth, efficient operations, and prudent financial management. However, high leverage remains a risk factor.Income Statement
Bright Horizons has shown a strong upward trajectory in revenue growth, with a notable increase from previous years. The gross profit margin and net profit margin have also improved, indicating operational efficiency. The EBIT and EBITDA margins reflect solid profitability, contributing to a robust financial position.85
Very Positive
Balance Sheet
The company's balance sheet shows a stable equity ratio, suggesting financial stability. While the debt-to-equity ratio has improved, indicating better leverage management, it remains relatively high, which could pose potential risks. Return on equity is healthy, reflecting good returns for shareholders.78
Positive
Cash Flow
The cash flow statement highlights consistent free cash flow generation, supporting ongoing operations and investments. The operating cash flow to net income ratio indicates strong cash conversion, although there has been some fluctuation in free cash flow growth.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.73B | 2.69B | 2.42B | 2.02B | 1.76B | 1.52B | Gross Profit |
| 634.36M | 619.61M | 522.23M | 478.65M | 415.01M | 304.55M | EBIT |
| 271.76M | 246.62M | 160.49M | 157.59M | 129.02M | 53.33M | EBITDA |
| 343.38M | 344.54M | 281.92M | 265.27M | 230.35M | 165.00M | Net Income Common Stockholders |
| 161.25M | 140.19M | 74.05M | 80.64M | 70.46M | 26.99M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 122.03M | 122.03M | 93.57M | 36.22M | 260.98M | 384.34M | Total Assets |
| 3.85B | 3.85B | 3.90B | 3.80B | 3.64B | 3.73B | Total Debt |
| 1.79B | 1.79B | 1.86B | 1.97B | 1.78B | 1.85B | Net Debt |
| 1.68B | 1.68B | 1.79B | 1.93B | 1.52B | 1.46B | Total Liabilities |
| 2.57B | 2.57B | 2.68B | 2.72B | 2.46B | 2.44B | Stockholders Equity |
| 1.28B | 1.28B | 1.21B | 1.08B | 1.18B | 1.28B |
| Cash Flow | Free Cash Flow | ||||
| 214.17M | 240.15M | 165.12M | 128.46M | 169.59M | 136.74M | Operating Cash Flow |
| 307.34M | 337.46M | 256.14M | 188.47M | 227.25M | 209.57M | Investing Cash Flow |
| -94.26M | -117.76M | -126.94M | -278.05M | -117.39M | -83.83M | Financing Cash Flow |
| -159.59M | -183.81M | -91.63M | -121.34M | -230.03M | 229.00M |
Bright Horizons Technical Analysis
Neutral
122.03
Price Trends
123.05
Negative
120.34
Positive
124.40
Negative
Market Momentum
0.60
Negative
50.15
Neutral
32.17
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BFAM, the sentiment is Neutral. The current price of 122.03 is above the 20-day moving average (MA) of 120.79, below the 50-day MA of 123.05, and below the 200-day MA of 124.40, indicating a neutral trend. The MACD of 0.60 indicates Negative momentum. The RSI at 50.15 is Neutral, neither overbought nor oversold. The STOCH value of 32.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $6.96B | 43.80 | 12.63% | ― | 9.71% | 94.22% | |
73 Outperform | $10.80B | 20.90 | 32.71% | 1.61% | 2.40% | 4.07% | |
69 Neutral | $634.31M | 13.31 | 22.96% | 1.08% | 5.02% | 45.34% | |
61 Neutral | $6.68B | 11.75 | 3.01% | 3.94% | 2.61% | -21.96% |
* Consumer Cyclical Sector Average
Performance Comparison
BFAM
Bright Horizons
122.03
9.32
8.27%
CSV
Carriage Services
41.49
15.27
58.24%
SCI
Service International
75.87
6.82
9.88%
Bright Horizons Earnings Call Summary
Earnings Call Date:May 05, 2025
(Q1-2025)
| % Change Since: -3.78%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with significant revenue and earnings growth across multiple segments. However, challenges remain in certain US markets due to macroeconomic uncertainties affecting enrollment. Enrollment growth assumptions were slightly reduced, but overall, the company showed resilience and strategic progress, particularly in the UK and through cross-service client expansion.Q1-2025 Updates
Positive Updates
Strong Earnings and Revenue Growth
Revenue for the quarter increased 7% to $666 million, and adjusted EPS grew 51% to $0.77 per share, exceeding expectations.
Full-Service Child Care Business Expansion
Full-service child care business grew 6% to $511 million, with operating margins expanding 210 basis points to 6.5%.
Backup Care Revenue Increase
Backup care revenue increased 12% to $129 million, with a 95% client retention rate and many new client launches, including University of Michigan and Sherwin-Williams.
Education Advisory Business Growth
Education advisory business grew 8% to $26 million, with strong participant engagement and new client additions like Tower Health and Tiffany's.
Improved UK Operations
The UK operations showed strong progress in enrollment and staff retention, with a clear path to earnings break-even in 2025.
Raised Revenue Growth Guidance
Revenue growth guidance was raised to a range of 6.5% to 8.5%, reflecting favorable changes in foreign exchange rates.
Negative Updates
Enrollment Challenges in US Markets
Slower velocity in the pace of commitments in some US markets due to macroeconomic uncertainty.
Lower Enrollment Growth Assumptions
Enrollment growth assumptions were reduced from 2.5%-3.5% to 2%-3% due to slower decision-making by families.
Mid-60s Occupancy Levels
Occupancy levels in full-service centers averaged in the mid-60s, below pre-COVID levels of 70%.
Company Guidance
In the recent earnings call, Bright Horizons Family Solutions provided optimistic guidance for the fiscal year 2025, highlighting a 7% increase in revenue to $666 million for the first quarter. The company reported a 51% growth in adjusted EPS to $0.77 per share. Segment-wise, the full-service child care business saw a 6% revenue increase to $511 million, with operating margins expanding by 210 basis points to 6.5%. The backup care segment experienced a 12% revenue growth to $129 million, and the education advisory business grew by 8% to $26 million. The company also raised its revenue growth guidance to a range of 6.5% to 8.5%, attributing this to favorable changes in foreign exchange rates while maintaining adjusted EPS guidance between $3.95 and $4.15. Bright Horizons emphasized its One Bright Horizon strategy, focusing on expanding service adoption among existing clients and enhancing integration across its offerings to drive sustainable growth.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.