Possible head and shoulders pattern forming on Laureate Education
Laureate Education (Nasdaq: LAUR) is a for-profit education company with a focus on countries outside the United States. The company operates through five segments—Brazil, Mexico, Andean, Rest of World, and Online & Partnerships. The company is headquartered domestically in Baltimore, but focuses on building its education business outside the U.S.
The company hasn't been performing very well lately both in terms of fundamental and price performance. The company lost money in the third quarter when it was supposed to make money and that was with EPS growth of 28%. Analysts expect the company to make money again in the fourth quarter, but lose money again in the first quarter.
Sales have declined by an average of 8% per year over the last three years and they were down by 1% in the third quarter.
Because the company has been losing money, the return on equity is -0.24%. The profit margin is at 3.8% and both of these figures are well below average.
When we add up the declining sales and the below average management efficiency measurements, we get a poor SMR rating from Tickeron. Laureate's rating is a 94 and that indicates weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The best score a company can get is 1 and the worst score is 100.
As low as the SMR rating is, the Profit vs. Risk Rating is even worse at 100. This indicates that the returns do not compensate for the risks. Laureate’s unstable profits reported over time resulted in significant drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating for the industry is 77, placing this stock worse than average.
The one area where Laureate ranks above average is the PE Growth Rating. The company scores a 5 on this rating scale and that indicates outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents. A rating of 1 indicates highest PE growth while a rating of 100 indicates lowest PE growth.
Looking at the daily chart for Laureate, it looks like the stock could be forming a head and shoulders pattern. The left shoulder was formed at the $17 level in June, the left side of the neck was formed at $15 in late June, and the head comes from the $18.50 high in September. The right side of the neck is down near the $15 area in October, and now the right shoulder could be forming at $17. If this is accurate, the stock will drop back down to $15 and then break lower.
Turning our attention to the sentiment toward Laureate, it doesn't have a great deal of analysts following it. There are only eight analysts covering the stock with seven "buy" ratings and one "hold" rating. This puts the buy percentage at 87.5% which is higher than the average stock. Of course it loses some of its importance because there is so little coverage.
The short interest ratio is higher than average at 4.62. The ratio had been holding in the 1.0 to 2.0 range for several months, but it jumped from 1.61 to 2.64 to 4.62 in the last three reporting periods. The jump has been caused by an increase in the number of shares sold short and a decline in the average daily trading volume.
EDUC sees its Stochastic Oscillator recovers from oversold territory
On December 31, 2024, the Stochastic Oscillator for EDUC moved out of oversold territory and this could be a bullish sign for the stock. Traders may want to buy the stock or buy call options. Tickeron's A.I.dvisor looked at 60 instances where the indicator left the oversold zone. In of the 60 cases the stock moved higher in the following days. This puts the odds of a move higher at over .
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where EDUC's RSI Indicator exited the oversold zone, of 27 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on January 03, 2025. You may want to consider a long position or call options on EDUC as a result. In of 97 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for EDUC just turned positive on January 02, 2025. Looking at past instances where EDUC's MACD turned positive, the stock continued to rise in of 39 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where EDUC advanced for three days, in of 218 cases, the price rose further within the following month. The odds of a continued upward trend are .
EDUC may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
Following a 3-day decline, the stock is projected to fall further. Considering past instances where EDUC declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for EDUC entered a downward trend on January 06, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.406) is normal, around the industry mean (2.767). EDUC has a moderately high P/E Ratio (111.500) as compared to the industry average of (39.901). Projected Growth (PEG Ratio) (0.000) is also within normal values, averaging (6.419). Dividend Yield (0.034) settles around the average of (0.044) among similar stocks. P/S Ratio (0.325) is also within normal values, averaging (23.505).
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. EDUC’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. EDUC’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 81, placing this stock worse than average.
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a publisher of children's books and educational books
Industry PublishingBooksMagazines