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Why Is Adtalem (ATGE) Up 7.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Adtalem Global Education (ATGE - Free Report) . Shares have added about 7.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Adtalem due for a pullback? 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 catalysts.
Adtalem Q4 Earnings & Revenues Top Estimates, Up Y/Y
Adtalem Global Education Inc. posted better-than-expected results in fourth-quarter fiscal 2024. Earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year, given strong enrollment growth and strategic initiatives.
The company registered strong quarterly performance, driven by its Growth with Purpose strategy. This success underscores its commitment to excellence and sets the stage for the fiscal 2025, with forward-looking guidance establishing new benchmarks for continued achievement.
Earnings & Revenue Discussion
Adjusted earnings of $1.37 per share topped the consensus mark of $1.24 by 10.5% and increased 33% from $1.03 in the year-ago quarter.
Revenues of $409.9 million beat the consensus mark of $397 million by 3.3% and increased 12.4% year over year. Strong demand at Chamberlain University and Walden University (led by nursing programs) drove results.
For the fiscal fourth quarter, enrollment of total students rose 10% year over year to 83,321 students.
Adjusted operating income increased 14.6% from the prior-year quarter’s level to $80.1 million. Adjusted operating margin expanded 30 basis points (bps) to 19.5%.
Adjusted EBITDA was $97.4 million, up 16.9% from the prior-year quarter’s level. Adjusted EBITDA margin expanded 100 bps to 23.8% year over year.
Segment Details
Chamberlain: Revenues in the segment were up 15.6% from the year-ago quarter’s level, totaling $167 million. Total student enrollment increased 10.4% to 36,750 students, driven by growth in pre-licensure and post-licensure nursing programs.
Adjusted operating income increased 13.5% from the prior-year quarter’s level to $40.5 million. Adjusted operating margin contracted 50 bps to 24.2%. Adjusted EBITDA was $47.3 million, up 15.1% from the prior-year quarter’s level. Adjusted EBITDA margins contracted 10 bps to 28.3%.
Walden: The segment generated revenues of $156.3 million, up 13.3% year over year. Total student enrollment in the quarter increased 11.3% year over year to 41,845 students, driven by growth in healthcare and non-healthcare programs.
Adjusted operating income came in at $37.4 million, up 16.2% year over year. Adjusted operating margin expanded 60 bps to 23.9%. Adjusted EBITDA was $41.1 million, up 16.6% from the prior-year period’s level. Adjusted EBITDA margins increased 70 bps to 26.3%.
Medical and Veterinary: Revenues in the segment increased 5.4% to $86.6 million from the year-ago quarter’s figure. Total student enrollment fell 2.9% from the prior-year quarter’s level to 4,726 students due to medical programs.
Adjusted operating income increased 10.7% from the prior-year quarter’s figure to $12 million. Adjusted operating margin expanded 60 bps to 13.2%. Adjusted EBITDA was $16.5 million, up 12.3% from the prior-year quarter’s level. Adjusted EBITDA margins increased 120 bps to 19%.
Fiscal 2024 Highlights
For the year, the company generated revenues of $1,584.7 million, up 9.2% year over year. Adjusted earnings of $5.01 were up 19% from $4.21 reported in the fiscal 2023.
Adjusted EBITDA rose 9.9% year over year to $377.5 million. Adjusted EBITDA margins rose just 10 bps year over year to 23.8%.
Liquidity & Cash Flow
As of Jun 30, 2024, Adtalem had cash and cash equivalents of $219.3 million compared with $272.2 million at the end of the fiscal 2023. Long-term debt was $648.7 million, down from $695.1 million at the end of the fiscal 2023. Trailing 12-month net debt to adjusted EBITDA was 1.2x at the fiscal 2024-end.
For the fiscal 2024, cash provided by operating activities (continuing operations) totaled $288.4 million compared with $194.7 million in the year-ago period. Free cash flow in the fiscal 2024 was $239.5 million compared with $168.7 million a year ago.
Fiscal 2025 Guidance
For the fiscal 2025, ATGE expects revenues within $1,660-$1,700 million, up approximately 5% to 7.5% year-over-year. It expects adjusted earnings of $5.60-$5.85 per share, suggesting an increase of approximately 12% to 17% year-over-year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 5.19% due to these changes.
VGM Scores
At this time, Adtalem has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 trending upward for the stock, and the magnitude of this revision looks promising. Notably, Adtalem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Adtalem is part of the Zacks Schools industry. Over the past month, Strategic Education (STRA - Free Report) , a stock from the same industry, has gained 4%. The company reported its results for the quarter ended June 2024 more than a month ago.
Strategic Education reported revenues of $312.27 million in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $1.33 for the same period compares with $0.82 a year ago.
Strategic Education is expected to post earnings of $0.81 per share for the current quarter, representing a year-over-year change of -16.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -5.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Strategic Education. Also, the stock has a VGM Score of D.
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Why Is Adtalem (ATGE) Up 7.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Adtalem Global Education (ATGE - Free Report) . Shares have added about 7.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Adtalem due for a pullback? 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 catalysts.
Adtalem Q4 Earnings & Revenues Top Estimates, Up Y/Y
Adtalem Global Education Inc. posted better-than-expected results in fourth-quarter fiscal 2024. Earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year, given strong enrollment growth and strategic initiatives.
The company registered strong quarterly performance, driven by its Growth with Purpose strategy. This success underscores its commitment to excellence and sets the stage for the fiscal 2025, with forward-looking guidance establishing new benchmarks for continued achievement.
Earnings & Revenue Discussion
Adjusted earnings of $1.37 per share topped the consensus mark of $1.24 by 10.5% and increased 33% from $1.03 in the year-ago quarter.
Revenues of $409.9 million beat the consensus mark of $397 million by 3.3% and increased 12.4% year over year. Strong demand at Chamberlain University and Walden University (led by nursing programs) drove results.
For the fiscal fourth quarter, enrollment of total students rose 10% year over year to 83,321 students.
Adjusted operating income increased 14.6% from the prior-year quarter’s level to $80.1 million. Adjusted operating margin expanded 30 basis points (bps) to 19.5%.
Adjusted EBITDA was $97.4 million, up 16.9% from the prior-year quarter’s level. Adjusted EBITDA margin expanded 100 bps to 23.8% year over year.
Segment Details
Chamberlain: Revenues in the segment were up 15.6% from the year-ago quarter’s level, totaling $167 million. Total student enrollment increased 10.4% to 36,750 students, driven by growth in pre-licensure and post-licensure nursing programs.
Adjusted operating income increased 13.5% from the prior-year quarter’s level to $40.5 million. Adjusted operating margin contracted 50 bps to 24.2%. Adjusted EBITDA was $47.3 million, up 15.1% from the prior-year quarter’s level. Adjusted EBITDA margins contracted 10 bps to 28.3%.
Walden: The segment generated revenues of $156.3 million, up 13.3% year over year. Total student enrollment in the quarter increased 11.3% year over year to 41,845 students, driven by growth in healthcare and non-healthcare programs.
Adjusted operating income came in at $37.4 million, up 16.2% year over year. Adjusted operating margin expanded 60 bps to 23.9%. Adjusted EBITDA was $41.1 million, up 16.6% from the prior-year period’s level. Adjusted EBITDA margins increased 70 bps to 26.3%.
Medical and Veterinary: Revenues in the segment increased 5.4% to $86.6 million from the year-ago quarter’s figure. Total student enrollment fell 2.9% from the prior-year quarter’s level to 4,726 students due to medical programs.
Adjusted operating income increased 10.7% from the prior-year quarter’s figure to $12 million. Adjusted operating margin expanded 60 bps to 13.2%. Adjusted EBITDA was $16.5 million, up 12.3% from the prior-year quarter’s level. Adjusted EBITDA margins increased 120 bps to 19%.
Fiscal 2024 Highlights
For the year, the company generated revenues of $1,584.7 million, up 9.2% year over year. Adjusted earnings of $5.01 were up 19% from $4.21 reported in the fiscal 2023.
Adjusted EBITDA rose 9.9% year over year to $377.5 million. Adjusted EBITDA margins rose just 10 bps year over year to 23.8%.
Liquidity & Cash Flow
As of Jun 30, 2024, Adtalem had cash and cash equivalents of $219.3 million compared with $272.2 million at the end of the fiscal 2023. Long-term debt was $648.7 million, down from $695.1 million at the end of the fiscal 2023. Trailing 12-month net debt to adjusted EBITDA was 1.2x at the fiscal 2024-end.
For the fiscal 2024, cash provided by operating activities (continuing operations) totaled $288.4 million compared with $194.7 million in the year-ago period. Free cash flow in the fiscal 2024 was $239.5 million compared with $168.7 million a year ago.
Fiscal 2025 Guidance
For the fiscal 2025, ATGE expects revenues within $1,660-$1,700 million, up approximately 5% to 7.5% year-over-year. It expects adjusted earnings of $5.60-$5.85 per share, suggesting an increase of approximately 12% to 17% year-over-year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 5.19% due to these changes.
VGM Scores
At this time, Adtalem has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 trending upward for the stock, and the magnitude of this revision looks promising. Notably, Adtalem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Adtalem is part of the Zacks Schools industry. Over the past month, Strategic Education (STRA - Free Report) , a stock from the same industry, has gained 4%. The company reported its results for the quarter ended June 2024 more than a month ago.
Strategic Education reported revenues of $312.27 million in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $1.33 for the same period compares with $0.82 a year ago.
Strategic Education is expected to post earnings of $0.81 per share for the current quarter, representing a year-over-year change of -16.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -5.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Strategic Education. Also, the stock has a VGM Score of D.