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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Bright Horizons Family Solutions Inc. (XNYS:BFAM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
BFAM
Name:
BRIGHT HORIZONS FAMILY SOLUTIONS INC. (XNYS:BFAM)
Sector:
46.96M
Industry:
Personal Services
CEO:
Mr. Stephen Kramer
Total Employees:
25,800
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -75.04% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF BRIGHT HORIZONS FAMILY SOLUTIONS INC.(BFAM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND PERSONAL SERVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
65.9
One Month Price Target:
$66.29
Six Month Price Target :
$68.25
Likely Price in One Year's Time:
Ticker:
$70.59
Likely Trading Range Today Under (Normal Volatility)
$65.51
Price Upper limit ($) :
$66.19
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$61.73
This week:
$56.58
This month :
$47.27
Other Primary facts
Market Cap:
3.83B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
57.81M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
20.03%
-24.46%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$85.26
$76.57
$46.54
$55.23
Medium risk (<10%) entry points
Buy Call
Sell Call
$73.74
Buy Put:
Sell Put:
$71.89
$58.03
$59.91
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
BFAM
Sharpe Ratio:
-2.69%
Comparison:
BFAM, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -1046.48% lower than the industry
& is -218.13% lower than the market/S&P 500 average
Average Returns/Yield of
BFAM
Daily returns:
-0.07%
Weekly returns:
-0.37%
Monthly returns:
-1.46%
Yearly returns:
0.17%
Comparison of returns:
Average annual returns/yield (last 3 years) is -10333.69% below industry average
Classification:
BFAM, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.43
Statistical test of Returns:
BFAM has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.04%
Weekly Volatility:
6.80%
Monthly Volatility:
13.61%
Yearly Volatility:
47.14%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.49%
Volatility in last five trading days has been -83.75% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.32%
Weekly VaR:
-14.14%
Monthly VaR:
-28.27%
How Much Can the price of
BFAM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-26%
Worst case (decline):
>85%
This translates to price declining to:
$48.86
This translates to price declining to:
$9.89
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
BFAM is a 99.56% riskier investment compared to the market/S&P 500 & is 70.96% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 7.54% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
BFAM
Beta in relation to market/S&P 500--1.06
Expected beta in 1 year's time:
0.822
Expected beta in 3 year's time:
1.162
Unlevered (debt free) Beta:
0.512
Beta in relation to Nasdaq (XNAS):
0.776
Beta in relation to all global stocks::
0.822
Beta Comparison & Analysis
Beta of competitors/peers::
1.649
Beta is -35.75% lower than peers
Average Industry Beta:
0.861
Beta is 22.98% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
4.32%
Sustainable growth rate is -78.37% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.279
Alpha is 214.73% above industry average alpha yield
Alpha is -1779% below the market average
Analysis of Cost of Capital of
BFAM
Equity cost of capital:
0.104
Equity cost of capital is 14.98% above industry mean WACC
Unlevered (without debt) cost of capital:
5.03%
Before-tax cost of debt:
1.93%
After-tax cost of debt:
1.52%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.52%
WACC is 5.58% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$31.57
Revenue growth rate per share of (3Y):
3.25
Annual revenue growth rate is -162.86% below industry average
EPS:
$1.37
Expected Annual growth rate of EPS (3Y):
-28.15%
Expected future EPS growth rate is -13902.12% lower than the Personal Services industry
Free cash flow (FCF) per share:
$2.68
-
-
Debt per share
$28.75
EBITDA per share
$4.34
Valuation Analysis Today of
BFAM
P/E Ratio:
44.64
P/E Ratio of Competitors/Peers:
18.24
P/E ratio is 144.77% higher than main peers & is 7.93% higher than the industry
Stock price/value with industry average P/E ratio: $56.67
BFAM is 16.30% overvalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
2.09
Price to sales ratio is -40.56% below the industry mean
P/B (Price to book value ratio):
3.25
Price to free cash flow: 24.61
-
Net income growth rate (3Y):
-56.69%
Net income growth rate is -81.69% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
141.78%
Net debt to equity ratio:
128.89%
Debt to assets ratio:
46.25%
Net debt to assets ratio:
42.05%
Debt-to-asset ratio is -43.78% below industry average
Ability to repay debt:
Interest coverage ratio:
7.36
Interest coverage ratio is -89.59% less than industry average
Looking forward:
Debt growth rate:
59.53%
Annual debt growth is 1342% higher than industry average debt growth rate
Debt repayment rate in last quarter: 0.24%
Analysis of Key Statistics
Correlation of price movement with the market:
0.514
Statistical significance of correlation:
BFAM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.482
Stock price is 6.75% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.482
Correlation of price movement with Nasdaq (^IXIC):
-0.015
Covariance of price movement with the market:
-0.027
Kurtosis
14.128
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-1.144
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
BFAM
Gross Profit Margin Ratio:
97%
Operating Profit Margin Ratio:
8.03%
Operating profit margin is -29.32% lower than the industry
Net Profit Margin Ratio:
97%
Effective Tax Rate:
24.63%
Effective tax rate is 3.26% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
7.06%
Return on equity (ROE) is -104.24% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
2.30%
Return on assets (ROA) is -70.39% lower than the industry
Financial Leverage:
1.9x
Current Ratio:
0.87
Current ratio is -14.53% below industry average
Cash Conversion Cycle (days):
47.2
Cash conversion cycle is 147.12% above industry average
The remaining useful life of property plant & equipment is: 5.2 years
Stock based compensation to net income ratio:
7.37%
In-depth Efficiency Analysis
Revenue generated per employee:
70.7K
Each employee generates -82% less revenue than industry average revenue per employee
EBITDA generated per employee:
9.7K
Each employee generates -91% less EBITDA than industry average revenue per employee
Profit generated per employee:
3.2K
Each employee generates -95% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
1.8K
Each employee generates -93% less free cash flow than industry average revenue per employee
Assets/Capital per employee
119.1K
Each employee generates -93% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
BFAM
PLANET FITNESS, INC. (XNYS:PLNT)
BRUNSWICK CORPORATION (XNYS:BC)
PVH CORP. (XNYS:PVH)
TOLL BROTHERS, INC. (XNYS:TOL)
MACY'S, INC. (XNYS:M)
MARRIOTT VACATIONS WORLDWIDE CORPORATION (XNYS:VAC)
GILDAN ACTIVEWEAR INC. (XNYS:GIL)
SKECHERS U.S.A., INC. (XNYS:SKX)
BOYD GAMING CORPORATION (XNYS:BYD)
Current Analyst Ratings
Strong buy�8%
Buy�13%
Hold�17%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
1.82B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
1.38B
443.71M
-
-
268.46M
-
28.78M
297.24M
-
34.13M
107.12M
251.03M
146.47M
82.73M
109.77M
27.04M
82.73M
Statement of Cash Flow
Date:
Period:
25.58M
Differed Income Tax :
376.00K
Stock Based Compensation :
6.10M
Change in Working Capital :
6.95M
Accounts Receivables:
22.89M
Other Working Capital:
- 23275.00K
Other Non-Cash Items:
159.00K
Net Cash Provided by Operating Activities:
58.56M
Investments in PP&E:
- 11595.00K
Net Acquisitions:
- 147.00K
Purchases of Investments:
- 3180.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
257.23M
-
257.23M
187.71M
-
76.14M
521.07M
1.27B
1.47B
243.42M
-
-
92.75M
3.07B
-
3.59B
-
106.15M
-
232.90M
259.56M
598.61M
1.66B
96.33M
1.82B
-
2.42B
59.00K
490.37M
- 35665.0K
717.75M
March 31, 2022 at 6:00:00 AM
1.68B
1.17B
3.59B
-
1.77B
1.5B
5.57M
-
- 9353.00K
- 4000.00K
-
- 39913.00K
-
- 8216.00K
- 52129.00K
- 605.00K
- 3529.00K
261.75M
265.28M
58.56M
- 11595.00K
46.96M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
BFAM
2023
2024
2025
2026
2027
$59.59
$63.84
$68.38
$73.25
$78.46