Bright Horizons Family Solutions Inc. Common Stock (BFAM)

FairStock Score: 41/100 — MIXED

Key Financials

Strengths

• Generates $254 million in annual free cash flow (5.8% yield on market cap)
• Solid return on equity of 14.8% above cost of capital
• Established organization with 32,200 employees providing operational scale

Concerns

• Trades significantly above Graham Number ($43) with negative 94% margin of safety—limited downside protection
• Altman Z-Score of 1.5 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Bright Horizons Family Solutions Inc. Common Stock is a small-cap consumer cyclical company valued at $4.4 billion. The business generates $2.9 billion in annual revenue with a 0.7% net margin and $254 million in free cash flow. From a quality standpoint, Bright shows distressed Altman Z-Score of 1.5 warrants caution and adequate 15% ROE. On valuation, the stock is reasonably priced at 24.3x earnings, with trades above its Graham Number with a negative 94% margin. Growth dynamics show revenue growing at 8.8% and profit growth of -25.4%. Our composite FairStock Score of 41/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $254 million in annual free cash flow (5.8% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the consumer cyclical space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer