Huron Consulting: Better Business, Not Yet a Bargain
Tips E-22: A 1-minute summary of my fundamental analysis of Huron Consulting Group Inc. (NASDAQ: HURN)
Investment Thesis
Over the past decade, Huron Consulting Group improved margins, returns, and business mix, especially in healthcare and education. Huron has become a leaner, more capital-efficient consulting business, but valuation leaves insufficient margin of safety.
Main Business
Huron operates an integrated consulting, managed services, and digital solutions model anchored in regulated end markets. Healthcare (~50%) and education (~32%) dominate, supported by digital platforms in analytics, automation, and enterprise systems that deepen client embedment.
Growth
From 2015–2024, revenue grew at about 8.7% CAGR, with an estimated two-thirds attributable to acquisitions. While Huron’s core markets grow modestly, acquisitions have been the primary lever to scale capabilities,
Profitability
Profit growth reflects revenue scale and cost discipline rather than sustained margin expansion. Margins compressed earlier in the decade due to wage pressures and utilization issues, then stabilized post-2020 as Huron shifted toward digital and managed services.
Financial Strength
Cash generation is solid, but balance sheet flexibility has been reduced by buybacks and acquisition reinvestment. Reinvestment averaged 71% of NOPAT, largely acquisition-driven, heightening sensitivity to deal discipline and integration outcomes.
Peer Performance
Relative to peers, Huron shows recovery and improvement but not clear leadership across profitability metrics. ROIC and ROE now exceed cost of capital, but peers with stronger organic growth or higher margins still set the benchmark for capital efficiency.
Valuation
Intrinsic value offers limited upside, making the stock unattractive without a wider margin of safety.
For more insights and valuation details, refer to the original article on Seeking Alpha titled
END
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
How to be an Authoritative Source, Share This Post
If the above article was useful, you can find more insights on how to make money in my e-book. The e-book is now available from Amazon, Kobo and Google Play.
PS: If you are in Malaysia or Singapore, the e-book can only be download from Kobo and Google Play.
|
Disclaimer & DisclosureI am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
Disclaimer & Disclosure
I am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
Comments
Post a Comment