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Rick Pendergraft's Avatar
published in Blogs
Nov 21, 2019

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.

Related Ticker: EDUC

Aroon Indicator for EDUC shows an upward move is likely

EDUC's Aroon Indicator triggered a bullish signal on March 04, 2024. Tickeron's A.I.dvisor detected that the AroonUp green line is above 70 while the AroonDown red line is below 30. When the up indicator moves above 70 and the down indicator remains below 30, it is a sign that the stock could be setting up for a bullish move. Traders may want to buy the stock or look to buy calls options. A.I.dvisor looked at 149 similar instances where the Aroon Indicator showed a similar pattern. In of the 149 cases, the stock moved higher in the days that followed. This puts the odds of a move higher at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on March 28, 2024. You may want to consider a long position or call options on EDUC as a result. In of 98 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 March 13, 2024. Looking at past instances where EDUC's MACD turned positive, the stock continued to rise in of 40 cases over the following month. The odds of a continued upward trend are .

Following a +1 3-day Advance, the price is estimated to grow further. Considering data from situations where EDUC advanced for three days, in of 217 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The 10-day RSI Indicator for EDUC moved out of overbought territory on March 14, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 27 similar instances where the indicator moved out of overbought territory. In of the 27 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Stochastic Oscillator entered the overbought zone. Expect a price pull-back in the foreseeable future.

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 .

EDUC broke above its upper Bollinger Band on March 21, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

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 (2.377). EDUC's P/E Ratio (111.500) is considerably higher than the industry average of (33.707). Projected Growth (PEG Ratio) (0.000) is also within normal values, averaging (6.419). Dividend Yield (0.034) settles around the average of (0.041) among similar stocks. P/S Ratio (0.325) is also within normal values, averaging (17.240).

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to 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.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. EDUC’s price grows at a higher rate over the last 12 months as compared to 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 86, placing this stock worse than average.

Industry description

The industry includes companies that publish and market books and magazines/periodicals. John Wiley & Sons, Inc., Meredith Corporation and Scholastic Corporation are some of the biggest companies in this industry. Like many other industries, publishing companies have branched out into online/digital publications (while retaining their original print business), to capture the burgeoning market in electronic media. Business could be cyclical in certain cases, since weak consumer sentiment during an economic downturn might depress sales of some magazines and books.

Market Cap

The average market capitalization across the Publishing: Books/Magazines Industry is 2.6B. The market cap for tickers in the group ranges from 113.09K to 13.62B. IFPJF holds the highest valuation in this group at 13.62B. The lowest valued company is DIGI at 113.09K.

High and low price notable news

The average weekly price growth across all stocks in the Publishing: Books/Magazines Industry was -0%. For the same Industry, the average monthly price growth was 4%, and the average quarterly price growth was 9%. GCI experienced the highest price growth at 5%, while LEE experienced the biggest fall at -16%.

Volume

The average weekly volume growth across all stocks in the Publishing: Books/Magazines Industry was 51%. For the same stocks of the Industry, the average monthly volume growth was -38% and the average quarterly volume growth was 10%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 40
P/E Growth Rating: 66
Price Growth Rating: 49
SMR Rating: 82
Profit Risk Rating: 85
Seasonality Score: -1 (-100 ... +100)
View a ticker or compare two or three
EDUCDaily Signal changed days agoGain/Loss if shorted
 
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General Information

a publisher of children's books and educational books

Industry PublishingBooksMagazines

Profile
Fundamentals
Details
Industry
Publishing Books Or Magazines
Address
5402 South 122nd East Avenue
Phone
+1 918 622-4522
Employees
138
Web
https://www.edcpub.com
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