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Bright Horizons (BFAM)
:BFAM
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Bright Horizons
(NYSE:BFAM)
Rating:74Outperform
Price Target:
$140.00
▲(11.91%Upside)
Positive Factors
Backup care business growth
Growth in the back-up care business impresses as employers increasingly provide incremental services, despite overall margin pressures.
Debt management and stock repurchase
BFAM paid down $49.5M in debt and repurchased ~$20M in stock.
UK operations outlook
Management sees a 'clear path' to breakeven in 2025 for the UK operations, which lost $10 million in 2024.
Negative Factors
Enrollment and pricing pressures
Enrollment is plateauing due to structural changes like hybrid work and universal pre-k, along with pricing fatigue from parents.
Market performance and valuation
BFAM underperformed the market by 570 bps in '24, attributable to its disappointing results and outlook in 3Q earnings.
Operating margins
Operating margins are expected to remain pressured below pre-COVID levels in the medium term.
Bright Horizons (BFAM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.48B
Dividend YieldN/A
Average Volume (3M)538.23K
Price to Earnings (P/E)40.9
Beta (1Y)0.70
Revenue Growth9.71%
EPS Growth94.22%
CountryUS
Employees32,050
SectorConsumer Cyclical
Sector Strength66
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)1.07
Shares Outstanding57,253,440
10 Day Avg. Volume613,375
30 Day Avg. Volume538,229
Financial Highlights & Ratios
PEG Ratio2.90
Price to Book (P/B)5.13
Price to Sales (P/S)0.00
P/FCF Ratio29.51
Enterprise Value/Market Cap1.21
Enterprise Value/Revenue0.72
Enterprise Value/Gross Profit11.87
Enterprise Value/Ebitda5.88
Forecast
1Y Price Target
$137.20Price Target Upside9.67% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Bright Horizons Business Overview & Revenue Model
Company DescriptionBright Horizons Family Solutions Inc. (BFAM) is a leading provider of high-quality early education and childcare services, operating in the United States, the United Kingdom, the Netherlands, and India. The company offers a range of services, including employer-sponsored childcare, back-up care, and educational advisory services, catering to the needs of working families and employers seeking to support their employees with family care solutions.
How the Company Makes MoneyBright Horizons generates revenue primarily through its employer-sponsored childcare centers, which are funded by corporate clients who offer these services as employee benefits. Additionally, the company earns income from back-up care services, which provide temporary care solutions to families in need of short-term childcare. Another significant revenue stream is the educational advisory services, which include college admissions counseling and related support. Bright Horizons partners with businesses to develop customized solutions, ensuring a steady flow of clients and maintaining long-term contracts that contribute to its financial stability and growth.
Bright Horizons Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: 10.61%|
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant revenue and EPS growth. There is positive momentum in both the full service and back-up care segments, and operational improvements in the U.K. However, challenges remain with center closures and the need to improve enrollment in certain centers. The increased guidance for the year underscores confidence in continued growth.Q2-2025 Updates
Positive Updates
Strong Financial Performance
Revenue increased 9% to $732 million, and adjusted EPS grew 22% to $1.07, both ahead of expectations.
Enrollment and Occupancy Growth
In the full service segment, revenue grew 7% to $540 million, with enrollment increasing at a low single-digit rate, and average occupancy stepping up to the high 60% range.
Back-up Care Expansion
Back-up care revenue grew 19% to $163 million, with strong client engagement and new client acquisition, including McKesson.
U.K. Operational Improvements
Continued growth in enrollment and margins in the U.K., with an ambition to reach breakeven by the end of the year.
Increased Revenue Guidance
Full year 2025 revenue guidance increased to a range of $2.9 billion to $2.92 billion, or 8% to 9% growth.
Negative Updates
Center Closures
Eight centers were closed during the quarter, primarily in the U.S., indicating challenges in some locations.
Enrollment Challenges
Continued focus on improving enrollment in centers below 70% occupancy, with some centers still underperforming.
Suboptimal Use of Tax Credits
Despite an increase in the 45F tax credit cap, there is a disconnect between HR and finance departments, limiting its impact on driving new client acquisition.
Company Guidance
During the Bright Horizons Family Solutions second quarter 2025 earnings call, the company's leadership provided guidance and highlighted several key metrics. Revenue increased by 9% to $732 million, surpassing expectations, with adjusted EPS growing by 22% to $1.07. The full service segment reported a revenue increase of 7% to $540 million, driven by enrollment growth, tuition hikes, and five new center openings. Occupancy improved to the high 60% range, with top-performing centers averaging over 80%. Back-up care revenue surged by 19% to $163 million, fueled by strong demand and new clients like McKesson. Educational advisory revenue rose by 8% to $29 million, supported by increased demand for College Coach services. The company raised its full-year 2025 guidance to a revenue range of $2.9 billion to $2.92 billion, reflecting 8% to 9% growth, and adjusted EPS between $4.15 and $4.25 per share.Bright Horizons Financial Statement Overview
Summary
Bright Horizons demonstrates a solid financial performance across income, balance sheet, and cash flow statements. Strong revenue and profit growth, efficient operations, and prudent financial management are evident. However, attention to leverage is advised to mitigate potential risks.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 | 2.79B | 2.69B | 2.42B | 2.02B | 1.76B | 1.52B |
| Gross Profit | 660.35M | 619.61M | 522.23M | 405.91M | 364.11M | 227.65M |
| EBITDA | 290.13M | 344.54M | 281.92M | 265.27M | 235.28M | 160.41M |
| Net Income | 246.04M | 140.19M | 74.05M | 80.64M | 70.46M | 26.99M |
Balance Sheet | ||||||
| Total Assets | 3.92B | 3.85B | 3.90B | 3.80B | 3.64B | 3.73B |
| Cash, Cash Equivalents and Short-Term Investments | 179.22M | 122.03M | 93.57M | 53.92M | 260.98M | 405.84M |
| Total Debt | 852.45M | 1.79B | 1.86B | 1.97B | 1.78B | 1.85B |
| Total Liabilities | 2.52B | 2.57B | 2.68B | 2.72B | 2.46B | 2.44B |
| Stockholders Equity | 1.40B | 1.28B | 1.21B | 1.08B | 1.18B | 1.28B |
Cash Flow | ||||||
| Free Cash Flow | 242.75M | 240.15M | 165.12M | 117.92M | 163.76M | 124.83M |
| Operating Cash Flow | 332.09M | 337.46M | 256.14M | 188.47M | 227.25M | 209.57M |
| Investing Cash Flow | -91.60M | -117.76M | -126.94M | -278.05M | -117.39M | -83.83M |
| Financing Cash Flow | -193.14M | -183.81M | -91.63M | -121.34M | -230.03M | 229.00M |
Bright Horizons Technical Analysis
Positive
125.10
Price Trends
120.96
Positive
121.63
Positive
120.52
Positive
Market Momentum
-1.14
Negative
67.30
Neutral
51.88
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 125.1 is above the 20-day moving average (MA) of 115.20, above the 50-day MA of 120.96, and above the 200-day MA of 120.52, indicating a bullish trend. The MACD of -1.14 indicates Negative momentum. The RSI at 67.30 is Neutral, neither overbought nor oversold. The STOCH value of 51.88 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $704.93M | 15.02 | 22.96% | 1.00% | 5.02% | 45.34% | |
74 Outperform | $6.48B | 40.89 | 12.63% | ― | 9.71% | 94.22% | |
70 Outperform | $10.86B | 20.71 | 34.52% | 1.62% | 2.65% | 7.42% | |
64 Neutral | £1.73B | 10.31 | 6.12% | 3.19% | 0.57% | -34.61% |
* Consumer Cyclical Sector Average
Performance Comparison
BFAM
Bright Horizons
125.10
-10.05
-7.44%
CSV
Carriage Services
45.22
14.50
47.20%
SCI
Service International
77.83
5.55
7.68%
Bright Horizons Corporate Events
Shareholder MeetingsStock Buyback
Bright Horizons Announces New Share Repurchase Program
Positive
Jun 3, 2025
On June 3, 2025, Bright Horizons held its annual shareholder meeting, where all director nominees were elected, the 2024 executive compensation was approved, and Deloitte & Touche LLP was ratified as the independent accounting firm for 2025. Additionally, the Board authorized a new $500 million share repurchase program, replacing the previous $400 million authorization, allowing the company to buy back shares at management’s discretion without an expiration date.
The most recent analyst rating on (BFAM) stock is a Buy with a $137.00 price target. To see the full list of analyst forecasts on Bright Horizons stock, see the BFAM Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.