Laureate Education (LAUR)

Higher education company Laureate Education (NASDAQ:LAUR) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 8.6% year on year to $400.2 million. The company’s full-year revenue guidance of $1.68 billion at the midpoint came in 2.7% above analysts’ estimates. Its GAAP profit of $0.23 per share was 18% below analysts’ consensus estimates.

Company Overview

Founded in 1998 by Douglas L. Becker and based in Miami, Laureate Education (NASDAQ:LAUR) is a global network of higher education institutions.

A whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.

Laureate Education's primary competitors include Strategic Education (NASDAQ:STRA), Adtalem Global Education (NYSE:ATGE), and Grand Canyon Education (NASDAQ:LOPE).

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Laureate Education’s 7.7% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer discretionary sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Laureate Education’s recent performance shows its demand has slowed as its annualized revenue growth of 5.6% over the last two years was below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its number of enrolled students, which reached 511,400 in the latest quarter. Over the last two years, Laureate Education’s enrolled students averaged 5.3% year-on-year growth. Because this number aligns with its revenue growth during the same period, we can see the company’s monetization was fairly consistent.

This quarter, Laureate Education reported year-on-year revenue growth of 8.6%, and its $400.2 million of revenue exceeded Wall Street’s estimates by 3.7%.

Looking ahead, sell-side analysts expect revenue to grow 10.2% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below average for the sector.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Laureate Education’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 23.5% over the last two years. This profitability was elite for a consumer discretionary business thanks to its efficient cost structure and economies of scale.

In Q3, Laureate Education generated an operating margin profit margin of 17.9%, down 1.7 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Laureate Education’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

In Q3, Laureate Education reported EPS of $0.23, down from $0.56 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Laureate Education’s full-year EPS of $1.37 to grow 43.6%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Laureate Education has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 14.1% over the last two years, better than the broader consumer discretionary sector.

Laureate Education’s free cash flow clocked in at $122.8 million in Q3, equivalent to a 30.7% margin. This cash profitability was in line with the comparable period last year and above its two-year average.

Over the next year, analysts’ consensus estimates show they’re expecting Laureate Education’s free cash flow margin of 15.6% for the last 12 months to remain the same.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Laureate Education historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 11.9%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Laureate Education’s ROIC has increased. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

Laureate Education is a profitable, well-capitalized company with $241 million of cash and $101 million of debt on its balance sheet. This $140 million net cash position is 3.3% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was great to see Laureate Education’s full-year revenue guidance top analysts’ expectations. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 1.4% to $29.27 immediately following the results.

Updated: December 3, 2025 at 9:56 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Laureate Education, you should also grasp the company’s longer-term business quality and valuation.

Laureate Education falls short of our quality standards. For starters, its revenue growth was weak over the last five years. On top of that, Laureate Education’s number of enrolled students has disappointed, and its Forecasted free cash flow margin for next year suggests the company will fail to improve its cash conversion.

Laureate Education’s P/E ratio based on the next 12 months is 16.1x. While this valuation is fair, the upside isn’t great compared to the potential downside. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $36 on the company (compared to the current share price of $30.95).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.