Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Laureate Education Jumped Today

By Timothy Green - Jan 28, 2020 at 1:44PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company will explore all possibilities to unlock shareholder value.

What happened

Shares of Laureate Education (LAUR 2.14%) rose on Tuesday after the company announced that it would explore strategic alternatives for each of its businesses. The stock was up 15.8% at 1 p.m. EST.

So what

Laureate, which operates 150 campuses with 850,000 students mainly in Latin America, will explore all possible options for unlocking shareholder value. This includes sales, spin-offs, and business combinations. The company is already exploring the sale of its businesses in Peru, Mexico, and Australia.

A rising chart.

Image source: Getty Images.

Laureate has previously divested higher-education institutions in the U.S., Europe, Asia, and Africa at accretive valuations. The company plans to use any after-tax proceeds from further divestitures to pay down debt and return capital to shareholders.

Along with the announcement, Laureate reiterated its guidance for the fourth quarter and full year. The company will report its results on Feb. 27.

Now what

Laureate is exploring strategic options because the company believes the market is undervaluing its assets. Some analysts agree, with Stifel seeing a sum-of-parts valuation of $28 per share, and Barclays seeing a range of $23 to $27. Including Tuesday's surge, the stock trades just above $20 per share.

While there's no guarantee Laureate will find buyers for its assets, at least at prices acceptable to the company, investors were optimistic enough to bid up the stock.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Laureate Education, Inc. Stock Quote
Laureate Education, Inc.
$12.40 (2.14%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.