$20.89
$64.09
bear $20.89
base $45.17
bull $64.09
margin of safety $28.00
market price* $38.61
Laureate Education runs private universities in two countries: Mexico (Universidad del Valle de México and UNITEC, $877 million or 52% of 2025 revenue) and Peru (UPC, UPN and the Cibertec institute, $824 million or 48%), with about 498,000 students in 2025 and a large network of medical and dental programs. Students pay tuition in pesos and soles; the company reports in U.S. dollars. It sold its other countries, including Walden University in the U.S., between 2020 and 2022, so we measure the business from 2022 onward. What changed since our last analysis. Our earlier estimate of the cash the business generates for its owners was too high, by about 40% for 2025. Three items were treated as if they cost nothing. They are real costs: - Uncollected tuition. In 2025 Laureate set aside $61 million (3.6% of revenue) for tuition it does not expect to collect. The accounts add it back as a "non-cash" charge, but money that never arrives is lost. - Campus rent. Laureate paid $59 million in 2025 to lease campuses. The way lease accounting runs through the cash-flow statement, most of that rent had been dropped from the calculation. - A one-time tax gain. 2025 profit includes a $57 million tax benefit from releasing old reserves after the statute of limitations ran out. No cash came in, and it will not repeat. To be consistent, we also added back a $37 million reserve charge in 2022. With these corrected, owner earnings per share were about $0.78 in 2022, $1.05 in 2023, $1.29 in 2024 and $1.64 in 2025, not the $2.69 we used before. That growth is real and has three sources: enrollment (growth in local currency, excluding currency effects, was 9% in Mexico and 7% in Peru in 2025), lower interest costs, and fewer shares after heavy buybacks. The first half of 2026 supports the 2025 level. Pre-tax profit excluding currency swings rose about 7.5%, and about 14% per share. We also gave new weight to a long-term fact the earlier analysis missed: Mexico's birth rate. Registered births in Mexico fell from about 2.64 million in 2008 to 2.29 million in 2016, 2.09 million in 2019 and 1.67 million in 2024. People born in 2008 reach college age now. From around 2030, each year's group of 18-year-olds gets smaller. By the mid-2030s it is about 13% to 20% smaller than today's, and it keeps shrinking after that. More young people going to college, and more adult students, can offset part of this, but not all of it. Over long periods the Mexican peso has also lost value against the dollar (from about 10 per dollar in 2000 to the high teens today). The Peruvian sol has been roughly stable over the same period. So tuition increases that keep up with local inflation become smaller increases once converted to dollars. Base case (about $45 per share). Owner earnings per share start from the 2025 level of $1.64. They grow 8% in 2026, a pace in line with the first half of 2026 and well below 2025's 27% jump, which included a lot of one-time catch-up. Growth then slows to about 5% by 2030 and 3% in the early 2030s as the Mexican student-age group starts to shrink. After that, dollar earnings grow about 1% a year: tuition keeps pace with local inflation, less the peso's long-run decline and a slowly shrinking pool of students. These are established institutions, some decades old, with licenses that are hard to replicate, so we expect them to keep earning well beyond ten years. About two-thirds of the value comes from after 2035. Bear case (about $21 per share). The margin gains of 2025 partly reverse and earning power falls back to its 2023-2025 middle level of about $1.29 per share. There is no growth in dollars for three years because of a peso or sol devaluation like those seen in 2008, 2014-2016 and 2020. Uncollected tuition keeps rising: it was 3.5% of revenue in the first half of 2026, up from 3.1% a year earlier. Growth afterward is minimal, and long-run dollar earnings shrink by about 1% a year as the Mexican student-age group declines. Laureate took on debt in 2026 to fund buybacks. Long-term debt rose from $73 million at the end of 2025 to $165 million by June 2026, alongside $186 million of buybacks in six months. That is still modest for a business earning well over $200 million a year, but it makes this case a little worse. Bull case (about $64 per share). The company's own growth plans deliver. Enrollment rises to the 518,000-523,000 management expects for 2026 and keeps growing. Medical, health and hybrid programs for working adults keep growing faster than the rest. Currencies stay stable. Growth starts at 12%, slows to 4% by the mid-2030s, and then runs at about 2% a year in dollars. Peru's government changed hands in July 2026. We have seen no concrete proposal that would affect private universities' licenses or tuition, so it does not change any case. Peru's university operating licenses were made permanent in 2024. What would make this wrong: a sharp, lasting fall in the peso or sol; new tuition controls or for-profit restrictions in either country; a faster decline in Mexican enrollment than the birth numbers imply; or bad debts continuing to climb. Our deduction for campus upkeep assumes most of 2025's higher capital spending ($103 million) was upkeep rather than expansion. If much of it was new capacity, true earning power is somewhat higher than we show. The margin-of-safety price is about $28 per share, roughly 38% below our base case. The discount is larger than for a steady domestic business. It reflects currency and political risk in two emerging markets, a shrinking pool of college-age Mexicans, rising bad debts and the new borrowing. It is set so that a path only modestly better than our bear case still implies a positive return from that price.