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Why Is Adtalem (ATGE) Down 6.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Adtalem Global Education (ATGE - Free Report) . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Adtalem due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Adtalem Q1 Earnings & Revenues Miss on Lower Enrollment
Adtalem Global Education Inc. reported first-quarter fiscal 2022 results. The company’s earnings and revenues lagged the respective Zacks Consensus Estimate. Despite strong revenues, its earnings also decreased on a year-over-year basis due to higher cost of Educational Services and Student Services as well as administrative expense.
In this connection, Steve Beard, president and CEO of Adtalem said, “New student enrollments decreased during the quarter – particularly in nursing – primarily due to COVID-related headwinds in our post-licensure programs. We expect these headwinds to subside over time and believe that demand for healthcare professionals will continue to outpace supply for the foreseeable future, which creates stronger growth opportunities for Adtalem going forward.”
Earnings & Revenues Discussion
Adjusted earnings of 62 cents per share missed the consensus mark of 74 cents and decreased from 78 cents a year ago.
Revenues for the quarter totaled $348.3 million, lagging the consensus mark by 1% but increasing 29.9% year over year driven by the Walden acquisition. For the fiscal first quarter, enrollment of new and total students dropped 14.1% and 4.5% year over year, respectively.
The company’s overall adjusted operating income rose 0.4% from the prior-year quarter to $54.6 million due to higher revenues, partially offset by increased costs from a return to in-person campus instruction, new campus expenses and a rise in marketing expense.
Segment Details
Chamberlain: Revenues in the segment increased 1.4% from the year-ago figure to $135.6 million. New student enrollment for the September session decreased 13.4% and total student enrollment declined 2.8% from the prior-year level. This depicts a return to historical norms from record-high enrollment levels in the comparable period. This was primarily attributable to COVID-related headwinds in post-licensure programs.
Walden: This segment generated revenues of $68.6 million. New and total student enrollment in the September session decreased 15.5% and 5.5%, respectively, year over year.
Medical and Veterinary: Revenues in the segment were unchanged from the year-ago figure at $84.8 million. New student enrollment decreased 4.6% and total student enrollment declined 6.9% from the prior-year level. This is due to declines at RUSM.
Financial Services: Revenues in the segment totaled $59.3 million, which increased 19.9% year over year driven by a rise in revenues at ACAMS, OnCourse Learning and Becker. ACAMS revenues rose as non-conference certification offerings continue to perform well and conference revenues tend to recover. OnCourse Learning’s persistent focus on execution in a favorable mortgage market and strength in the education business drove revenues for the quarter. Becker’s revenue growth stemmed from persistent improvement in the ongoing education program offerings and an increase in CPA exam preparation revenues.
Liquidity & Cash Flow
As of Sep 30, 2021, Adtalem had cash and cash equivalents of $360.1 million compared with $494.6 million at fiscal 2021-end. For the quarter, cash provided by operating activities totaled $40.9 million compared with $79.9 million in the year-ago period.
Guidance
For fiscal 2022, Adtalem expects revenues within $1,685-$1,735 million and adjusted earnings per share in the $4.20-$4.45 band. The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $1.71 billion and that of adjusted earnings is $4.30 per share, indicating 54% and 44.3% growth, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -5.13% due to these changes.
VGM Scores
Currently, Adtalem has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Adtalem has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Adtalem (ATGE) Down 6.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Adtalem Global Education (ATGE - Free Report) . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Adtalem due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Adtalem Q1 Earnings & Revenues Miss on Lower Enrollment
Adtalem Global Education Inc. reported first-quarter fiscal 2022 results. The company’s earnings and revenues lagged the respective Zacks Consensus Estimate. Despite strong revenues, its earnings also decreased on a year-over-year basis due to higher cost of Educational Services and Student Services as well as administrative expense.
In this connection, Steve Beard, president and CEO of Adtalem said, “New student enrollments decreased during the quarter – particularly in nursing – primarily due to COVID-related headwinds in our post-licensure programs. We expect these headwinds to subside over time and believe that demand for healthcare professionals will continue to outpace supply for the foreseeable future, which creates stronger growth opportunities for Adtalem going forward.”
Earnings & Revenues Discussion
Adjusted earnings of 62 cents per share missed the consensus mark of 74 cents and decreased from 78 cents a year ago.
Revenues for the quarter totaled $348.3 million, lagging the consensus mark by 1% but increasing 29.9% year over year driven by the Walden acquisition. For the fiscal first quarter, enrollment of new and total students dropped 14.1% and 4.5% year over year, respectively.
The company’s overall adjusted operating income rose 0.4% from the prior-year quarter to $54.6 million due to higher revenues, partially offset by increased costs from a return to in-person campus instruction, new campus expenses and a rise in marketing expense.
Segment Details
Chamberlain: Revenues in the segment increased 1.4% from the year-ago figure to $135.6 million. New student enrollment for the September session decreased 13.4% and total student enrollment declined 2.8% from the prior-year level. This depicts a return to historical norms from record-high enrollment levels in the comparable period. This was primarily attributable to COVID-related headwinds in post-licensure programs.
Walden: This segment generated revenues of $68.6 million. New and total student enrollment in the September session decreased 15.5% and 5.5%, respectively, year over year.
Medical and Veterinary: Revenues in the segment were unchanged from the year-ago figure at $84.8 million. New student enrollment decreased 4.6% and total student enrollment declined 6.9% from the prior-year level. This is due to declines at RUSM.
Financial Services: Revenues in the segment totaled $59.3 million, which increased 19.9% year over year driven by a rise in revenues at ACAMS, OnCourse Learning and Becker. ACAMS revenues rose as non-conference certification offerings continue to perform well and conference revenues tend to recover. OnCourse Learning’s persistent focus on execution in a favorable mortgage market and strength in the education business drove revenues for the quarter. Becker’s revenue growth stemmed from persistent improvement in the ongoing education program offerings and an increase in CPA exam preparation revenues.
Liquidity & Cash Flow
As of Sep 30, 2021, Adtalem had cash and cash equivalents of $360.1 million compared with $494.6 million at fiscal 2021-end. For the quarter, cash provided by operating activities totaled $40.9 million compared with $79.9 million in the year-ago period.
Guidance
For fiscal 2022, Adtalem expects revenues within $1,685-$1,735 million and adjusted earnings per share in the $4.20-$4.45 band. The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $1.71 billion and that of adjusted earnings is $4.30 per share, indicating 54% and 44.3% growth, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -5.13% due to these changes.
VGM Scores
Currently, Adtalem has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Adtalem has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.