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LINC (Lincoln Educational Services) Earnings Power Value (EPV) : $5.48 (As of Dec24)


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What is Lincoln Educational Services Earnings Power Value (EPV)?

As of Dec24, Lincoln Educational Services's earnings power value is $5.48. *

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

Margin of Safety is -171.51

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future. Assumption: Current profitability is sustainable.


Lincoln Educational Services Earnings Power Value (EPV) Historical Data

The historical data trend for Lincoln Educational Services's Earnings Power Value (EPV) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Lincoln Educational Services Earnings Power Value (EPV) Chart

Lincoln Educational Services Annual Data
Trend Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23 Dec24
Earnings Power Value (EPV)
Get a 7-Day Free Trial Premium Member Only Premium Member Only 12.58 15.40 14.53 10.45 5.48

Lincoln Educational Services Quarterly Data
Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24 Dec24
Earnings Power Value (EPV) Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 10.45 9.89 8.94 7.01 5.48

Competitive Comparison of Lincoln Educational Services's Earnings Power Value (EPV)

For the Education & Training Services subindustry, Lincoln Educational Services's Earnings Power Value (EPV), along with its competitors' market caps and Earnings Power Value (EPV) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Lincoln Educational Services's Earnings Power Value (EPV) Distribution in the Education Industry

For the Education industry and Consumer Defensive sector, Lincoln Educational Services's Earnings Power Value (EPV) distribution charts can be found below:

* The bar in red indicates where Lincoln Educational Services's Earnings Power Value (EPV) falls into.



Lincoln Educational Services Earnings Power Value (EPV) Calculation

Earnings Power Value also known as just Earnings Power is a valuation technique popularised by Bruce Greenwald, an authority on value investing at Columbia University. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. This valuation tool excludes the potential growth that a company may have so that needs to be looked at separately. Since future growth is excluded from the analysis, only the maintenance capital expenditures are subtracted from after-tax EBIT (earnings before interest and taxes) and growth capex is ignored.

Lincoln Educational Services's "Earning Power" Calculation:

Average of Last 20 Quarters Last Quarter
Revenue 359.0
DDA 7.8
Operating Margin % 4.37
SGA * 25% 48.0
Tax Rate % 29.90
Maintenance Capex 19.8
Cash and Cash Equivalents 59.3
Short-Term Debt 9.5
Long-Term Debt 168.1
Shares Outstanding (Diluted) 31.1

1. Start with "Earnings" not including accounting adjustments (one-time charges not excluded unless policy has changed). "Earnings" are "Operating Income.

2. Look at average margins over a business/Industry cycle: Average Operating Margin = 4.37%

To normalize margins and eliminate the effects on profitability of valuing the firm at different points in the business cycle, it is usually best to take a long-term average of operating margins. Ideally this would be as long as 10 years and include at least one economic downturn. However, since most of companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year margin.

3. Multiply average margins by sustainable revenues and then adjust for maintenance SGA. This yields "normalized" EBIT:

To be conservative, GuruFocus uses an average of the 5 year revenues as the sustainable revenue.
EPV analysis recognises that part of SG&A expenditure is made to maintain and replace the existing assets, while part is made to grow sales. Since EPV is only interested in what it costs a going concern to maintain its existing asset base, it adds back a percentage of SG&A (between 15% and 50% - this is a matter of judgment and industry knowledge) to make up for the fact that some of this expenditure went to fund growth and shouldn't be accounted for. To start off, we assume 25% for the sake of prudence.
Sustainable Revenue = $359.0 Mil, Average Operating Margin = 4.37%, Average Adjusted SGA = 48.0,
therefore "Normalized" EBIT = Sustainable Revenue * Average Operating Margin + Average Adjusted SGA = 359.0 * 4.37% +48.0 = $63.713269958 Mil.

4. Multiply by one minus Average Tax Rate (NOPAT):

Same as average operating margin calculation, GuruFocus takes an average of the 5 years tax rates.
Average Tax Rate = 29.90%, and "Normalized" EBIT = $63.713269958 Mil,
therefore After-tax "Normalized" EBIT = "Normalized" EBIT * ( 1 - Average Tax Rate ) = 63.713269958 * ( 1 - 29.90% ) = $44.663957939607 Mil.

5. Add back Excess Depreciation (after tax at 1/2 average tax rate). This yields "normalized" Earnings:

Excess Depreciation = Average DDA * % of Excess Depreciation (after tax at 1/2 average tax rate) = 7.8 * 0.5 * 29.90% = $1.161018552 Mil.
"Normalized" Earnings = After-tax "Normalized" EBIT + Excess Depreciation = 44.663957939607 + 1.161018552 = $45.824976491607 Mil.

6. Adjusted for Maintenance Capital Expenditure:

First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Third, calculate Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
Fourth, GuruFocus uses an average of the 5 year maintenance capital expenditures as maintenance CAPEX.
Lincoln Educational Services's Average Maintenance CAPEX = $19.8 Mil *.
* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

7. Investors require a return of "WACC" for the risk they are taking: WACC = 9%

8. Lincoln Educational Services's current cash and cash equivalent = $59.3 Mil.
Lincoln Educational Services's current interest bearing debt = Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation = 168.1 + 9.5 = $177.561 Mil.
Lincoln Educational Services's current Shares Outstanding (Diluted Average) = 31.1 Mil.

Lincoln Educational Services's Earnings Power Value (EPV) for Dec24 is calculated as:

EPV = ( ( Norm. Earnings-Maint. CAPEX *) / WACC + CashandEquiv - Int. Bearing Debt ) / Shares Outstanding (Diluted Average)
= ( ( 45.824976491607 - 19.8)/ 9%+59.3-177.561 )/31.1
=5.48

Margin of Safety (EPV)=( Earnings Power Value (EPV)-Current Price )/Earnings Power Value (EPV)
=( 5.476801842198-14.87 )/5.476801842198
= -171.51%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.


Lincoln Educational Services  (NAS:LINC) Earnings Power Value (EPV) Explanation

Assumption: Current profitability is sustainable.

Earnings power value (EPV) uses a very basic equation which assumes no growth, although it does rely on an assumption about the cost of capital as well as the fact that current earnings are sustainable. It also involves several adjustments to clean up the underlying Earnings figures.


Be Aware

Though using today's earnings in calculating Earnings Power Value, GuruFocus is normalizing these earnings to the business cycle. This eliminates the effects on profitability of valuing the firm at different points in the business cycle. This means that we are considering the average earnings over 5 years.


Lincoln Educational Services Earnings Power Value (EPV) Related Terms

Thank you for viewing the detailed overview of Lincoln Educational Services's Earnings Power Value (EPV) provided by GuruFocus.com. Please click on the following links to see related term pages.


Lincoln Educational Services Business Description

Traded in Other Exchanges
Address
14 Sylvan Way, Suite A, Parsippany, NJ, USA, 07054
Lincoln Educational Services Corp provides diversified career-oriented post-secondary education to high school graduates and working adults. The company offers programs in automotive technology, skilled trades, healthcare services, hospitality services and business and information technology. Its reportable segments include; Campus Operations, and Transitional. Majority of the revenue is generated from Campus Operations segment which includes all campuses that are continuing in operation and contribute to the Company's core operations and performance.
Executives
Juniper Investment Company, Llc 10 percent owner 555 MADISON AVENUE, 24TH FLOOR, NEW YORK NY 10022-3315
Chad D Nyce officer: Chief Innovation Officer C/O LINCOLN EDUCATIONAL SERVICES CORPORA, 200 EXECUTIVE DR., STE 340, WEST ORANGE NJ 07052
Brian K Meyers officer: CFO and Treasurer C/O LINCOLN EDUCATIONAL SERVICES CORPORA, 200 EXECUTIVE DR., STE. 340, WEST ORANGE NJ 07052
Michael A Plater director C/O LINCOLN EDUCATIONAL SERVICES CORP., 200 EXECUTIVE DRIVE, SUITE 340, WEST ORANGE NJ 07052
Burke James J Jr director C/O ANNTAYLOR STORES CORP, 7 TIMES SQUARE, 15TH FLOOR, NEW YORK NY 10036
J Barry Morrow director COLLEGIATE FUNDING SERVICES, 100 RIVERSIDE PARKWAY, FREDERICKSBURG VA 22406
Ronald Edward Harbour director C/O SPARTAN MOTORS INC, 1541 REYNOLDS ROAD, CHARLOTTE MI 48813
Kevin M Carney director 12735 GRAN BAY PARKWAY WEST, BUILDING 200, JACKSONVILLE FL 32258
Scott M Shaw officer: Executive Vice President C/O LINCOLN EDUCATIONAL SERVICES CORP, 200 EXECUTIVE DRIVE, SUITE 340, WEST ORANGE NJ 07052
Sylvia Jean Young director C/O LINCOLN EDUCATIONAL SERVICES CORPORA, 14 SYLVAN WAY, STE. A, PARSIPPANY NJ 07054
Juniper Targeted Opportunity Fund, L.p. 10 percent owner 555 MADISON AVENUE, 24TH FLOOR, NEW YORK NY 10022
Felecia J. Pryor director 3850 W. HAMLIN ROAD, AUBURN HILLS MI 48326
Carlton Rose director C/O LINCOLN EDUCATIONAL SERVICES CORPORA, 200 EXECUTIVE DRIVE, SUITE 340, WEST ORANGE NJ 07052
Stephen M Buchenot officer: Group VP of Operations C/O LINCOLN EDUCATIONAL SERVICES CORP., 200 EXECUTIVE DRIVE, SUITE 340, WEST ORANGE NJ 07052
Celia Currin director C/O LINCOLN EDUCATIONAL SERVICES CORP, 200 EXECUTIVE DRIVE, SUITE 340, WEST ORANGE NJ 07052