Laureate Education: A Valuation Re-Rating Opportunity with a 37.2% Upside

Laureate Education, a US-based higher education provider in Mexico and Peru, is undervalued at a forward P/E multiple of 13.3x. Analysts predict a 37.2% upside potential with a conservative re-rating.

Laureate Education (NASDAQ: LAUR), a leading provider of higher education in Mexico and Peru, reported its second quarter (Q2) 2025 financial results, showcasing robust growth and an upgrade in full-year revenue guidance. The company's strong performance was driven by increased student enrollments and favorable currency impacts.

Key Financial Highlights

- Revenue (GAAP) rose 5% to $524.2 million, surpassing analyst estimates by approximately 3.7% [1].
- Adjusted earnings per share (EPS) reached $0.79, while GAAP EPS fell to $0.65 due to foreign currency losses.
- Full-year FY2025 revenue and adjusted EBITDA (non-GAAP) guidance was raised, reflecting confidence in ongoing demand and more favorable currency rates.

Operating Performance

- Operating income improved by $26.7 million, reaching $193.3 million.
- Adjusted EBITDA climbed to $214.5 million, up nearly 15% year over year.
- New student enrollments grew 7% overall, with total student enrollments standing at 472,100, up 6%.

Strategic Focus

Laureate's strategic focus on digital learning and expanding its market share in Latin America has driven its growth. The company plans to open new campuses in Monterrey, Mexico, and Lima, Peru, further solidifying its presence in these key markets.

Outlook

Management raised its full-year FY2025 revenue guidance to between $1.615 billion and $1.630 billion, up from the previous range of $1.560 billion to $1.575 billion. Adjusted EBITDA guidance was also increased to $489 million to $496 million. The improved outlook reflects stronger-than-expected enrollment trends and more favorable foreign currency rates.

Investment Narrative

Laureate Education's forward P/E multiple of 13.3x is considered undervalued by analysts, who predict a 37.2% upside potential with a conservative re-rating. The company's focus on enrollment growth, digital learning, and campus expansion in Latin America presents a compelling investment narrative. However, currency volatility, particularly in Mexico, remains a significant consideration for investors.

References

[1] https://www.aol.com/finance/laureate-laur-q2-revenue-jumps-071255845.html