Adtalem Global Education Q1 Earnings: Is NYSE:ATGE Cheap at 9.1x Forward P/E?

in EARNINGS/INVESTING IDEAS by

Adtalem Global Education Inc. (NYSE:ATGE) is scheduled to report Q1 earnings results on November 5, 2020.

The company is expected to report earnings of $0.39/share on revenue of $257.7 million. The consensus earnings per share (EPS) of $0.39/share is based on a poll of 4 analysts and represents a growth in eps of 15.4% over the same quarter last year, when the company reported earnings of $0.34/share.

The revenue forecast of $257.7 million based on a poll of 4 analysts implies a year-over-year (YoY) growth in revenue of 1.2%. Last year the company reported $254.6 million in revenue for the quarter.

Expected to report EPS growth of 15.4% for Q1, 2021
Metric Expected Prior Year YoY Change
Revenue $257.75 $254.61 1.2%
EPS $0.39 $0.34 15.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, missed 2 quarters, and met expectations 1 quarter.

What are your expectations from Adtalem Global Education Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2020 $0.64 $0.58 −9.7% Missed
Q3, 2020 $0.67 $0.81 21.3% Beat
Q2, 2020 $0.55 $0.57 4.0% Beat
Q1, 2020 $0.46 $0.34 −26.1% Missed
Q4, 2019 $0.96 $0.97 0.7% Beat
Q3, 2019 $0.65 $0.68 4.6% Beat
Q2, 2019 $0.74 $0.74 0% Met
Q1, 2019 $0.41 $0.45 10.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −4.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 18, 2020 $35.47 $33.90 −4.4% Decline
May 5, 2020 $31.57 $32.75 3.7% Increase
February 4, 2020 $35.07 $36.16 3.1% Increase
October 29, 2019 $36.75 $29.70 −19.2% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.34, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.34 implies a 1.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Adtalem Global Education Inc. is currently trading at $23.44/share, down −1.9% for the day. The company is trading at approximately 60.9% of its 52-week high of $38.47/share. The company’s stock price is down −30.9% since the last earnings report and down −13.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 32.26 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:ATGE Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 5.00 and a forward P/E multiple of 9.07.

Adtalem Global Education Inc.’s current share price also implies a price-to-book (P/B) multiple of 0.93. The following table summarizes some other key fundamental ratios:

Data as of November 1, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q4
Period End Date June 30, 2020
Stock Price (Current) $23.44
P/E Ratio 5.0x
P/E Ratio (Fwd) 9.1x
PEG Ratio 0.0
Total Debt / Total Capital 29.5%
Levered Free Cash Flow $63.555 million
EV / EBITDA 5.8x

Finbox

Adtalem Global Education Inc. is a small-cap stock with a market capitalization of $1.221 billion and a total enterprise value of $1.24 billion. The company operates in the Consumer Discretionary sector and the Diversified Consumer Services industry.

Adtalem Global Education Inc. provides educational services worldwide. It operates through two segments, Medical and Healthcare and Financial Services. The Medical and Healthcare segment operates Chamberlain University, which provides a pre-licensure bachelor of science in nursing (BSN) program, registered nurse (RN)-to-BSN degree completion option, and graduate programs. The Chamberlain University offers educational services through its 22 campuses and online. This segment also operates medical and veterinary schools, such as American University of the Caribbean School of Medicine, Ross University School of Medicine, and Ross University School of Veterinary Medicine. The Financial Services segment provides test preparation, certifications, conferences, seminars, memberships, and subscriptions to business professionals in the areas of accounting, anti-money laundering, banking, and mortgage lending. It operates an Association of Certified Anti-Money Laundering Specialists that provides membership services, certified anti-money laundering specialist certification, conferences, risk assessment, training, and publications; and Becker Professional Education that prepares candidates for the Certified Public Accountant and Certified Management Accountant certification examinations, as well as professional education programs and seminars in accounting and finance. This segment also offers compliance training, mortgage licensure preparation, continuing education, and professional development in the banking and mortgage industries; and online and classroom programs in the areas of finance, accounting, and analytics. The company was formerly known as DeVry Education Group Inc. and changed its name to Adtalem Global Education Inc. in May 2017. Adtalem Global Education Inc. was incorporated in 1987 and is based in Chicago, Illinois.

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