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Why Is DeVry Education (ATGE) Up 11.5% Since the Last Earnings Report?
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It has been more than a month since the last earnings report for DeVry Education Group Inc. (ATGE - Free Report) . Shares have added about 11.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 drivers.
Recent Earnings
Note: The company reported its third-quarter fiscal 2017 results before changing its name.
Adtalem Global Education Inc. reported fourth-quarter fiscal 2017 results, wherein earnings beat the Zacks Consensus Estimate but revenues fell short of expectations.
Fourth-quarter fiscal 2017 adjusted earnings of 78 cents per share surpassed the Zacks Consensus Estimate of 72 cents by 8.3%. On a year-over-year basis, the company’s earnings increased 20%.
Adtalem’s quarterly net sales of $451.5 million missed the Zacks Consensus Estimate of $454 million by 0.6%. Total revenue also declined 4.3% from the year-ago figure of $471.7 million. Solid contribution from Professional Education as well as Technology and Business segments was offset by weak results from U.S. Traditional Postsecondary division.
The company’s total operating cost and expenses decreased 19.8% year over year to $398.1 million in the quarter. Operating income was $53.4 million in the quarter. However, in the year-ago period, the company incurred an operating loss of $24.9 million.
New Enrollments
New enrollment trends remained mixed by segment, with DeVry University, Carrington, and Medical and Veterinary all remaining weak (down 11% year over year, 18%, and 14%, respectively, as of each institution's most recent enrollment period), while Chamberlain new student enrollment improvement was a solid positive during the quarter. It was up 16.5% as of July against 4% growth in May and year-to-date average up in low-single-digits.
Segment Details
Medical and Healthcare: This reporting segment, which is the largest contributor to revenues and earnings, includes Chamberlain University, American University of the Caribbean School of Medicine, Ross University School of Medicine and Ross University School of Veterinary Medicine. In the fiscal fourth quarter, segmental revenues of $193.1 million remained flat compared with the year-ago level. Growth at Chamberlain University was offset by lower revenue at the medical and veterinary schools.
Operating income at the segment, barring special items, was $42.9 million, up 12.2% from the prior-year quarter.
At Chamberlain, revenues rose 2.4%. Revenue for the medical and veterinary schools decreased 3%.
In May, new student count of Chamberlain University increased 4%, raising the total student count by 5.7%. In July session, new students count grew 16.5%, while total students increased 6.3%.
Professional Education: The segment includes Becker and Association of Certified Anti Money Laundering Specialists or ACAMS. It also comprises DeVry Education of Brazil.
The segment registered revenues of $39.9 million, up 26.5% year over year, mostly driven by acquisitions of ACAMS.
Adjusted operating income was $11.1 million, down 16.8% year over year.
Technology and Business: This segment, comprising Adtalem Brazil Institution, registered revenues of $82.9 million, increasing 11% year over year, owing to currency benefit.
This segment generated operating income of $19 million, reflecting a year-over-year increase of 29%.
US Traditional Postsecondary: This reporting segment includes results of DeVry University and Carrington College.
The segment registered revenues of $136.3 million, declining 21.3% year over year because of declining enrollments at DeVry University in Carrington.
This division incurred an operating loss (adjusted for special item) of $898 million against a loss of $1,178 million a year ago.
DeVry University generated revenues of $104 million in the quarter, down 23% due to continued enrollment declines.
In July 2017, undergraduate new student enrollments declined 11.4%, while total students fell 22.1%.
Fiscal 2017 Highlights
The company’s earnings came in at $2.79 per share in the fiscal year, increasing 15.8% year over year.
Total revenue of $1,809.8 million declined 1.8% year over year.
Fiscal 2018 Guidance
The company expects earnings per share for fiscal 2018 to grow in the low-single digit range. Total revenue is anticipated to be flat to down 1% for the year.
Capital spending is expected in the range of $65-$70 million for fiscal 2018. The effective income tax rate for the fiscal year is likely to be around 21-22%.
Fiscal First Quarter Guidance
Revenues are expected to be down 4-5% in the quarter on a year-over-year basis. First quarter operating costs, before special items, are expected to decline 4-5% year over year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
Currently, the stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is DeVry Education (ATGE) Up 11.5% Since the Last Earnings Report?
It has been more than a month since the last earnings report for DeVry Education Group Inc. (ATGE - Free Report) . Shares have added about 11.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 drivers.
Recent Earnings
Note: The company reported its third-quarter fiscal 2017 results before changing its name.
Adtalem Global Education Inc. reported fourth-quarter fiscal 2017 results, wherein earnings beat the Zacks Consensus Estimate but revenues fell short of expectations.
Fourth-quarter fiscal 2017 adjusted earnings of 78 cents per share surpassed the Zacks Consensus Estimate of 72 cents by 8.3%. On a year-over-year basis, the company’s earnings increased 20%.
Adtalem’s quarterly net sales of $451.5 million missed the Zacks Consensus Estimate of $454 million by 0.6%. Total revenue also declined 4.3% from the year-ago figure of $471.7 million. Solid contribution from Professional Education as well as Technology and Business segments was offset by weak results from U.S. Traditional Postsecondary division.
The company’s total operating cost and expenses decreased 19.8% year over year to $398.1 million in the quarter. Operating income was $53.4 million in the quarter. However, in the year-ago period, the company incurred an operating loss of $24.9 million.
New Enrollments
New enrollment trends remained mixed by segment, with DeVry University, Carrington, and Medical and Veterinary all remaining weak (down 11% year over year, 18%, and 14%, respectively, as of each institution's most recent enrollment period), while Chamberlain new student enrollment improvement was a solid positive during the quarter. It was up 16.5% as of July against 4% growth in May and year-to-date average up in low-single-digits.
Segment Details
Medical and Healthcare: This reporting segment, which is the largest contributor to revenues and earnings, includes Chamberlain University, American University of the Caribbean School of Medicine, Ross University School of Medicine and Ross University School of Veterinary Medicine.
In the fiscal fourth quarter, segmental revenues of $193.1 million remained flat compared with the year-ago level. Growth at Chamberlain University was offset by lower revenue at the medical and veterinary schools.
Operating income at the segment, barring special items, was $42.9 million, up 12.2% from the prior-year quarter.
At Chamberlain, revenues rose 2.4%. Revenue for the medical and veterinary schools decreased 3%.
In May, new student count of Chamberlain University increased 4%, raising the total student count by 5.7%. In July session, new students count grew 16.5%, while total students increased 6.3%.
Professional Education: The segment includes Becker and Association of Certified Anti Money Laundering Specialists or ACAMS. It also comprises DeVry Education of Brazil.
The segment registered revenues of $39.9 million, up 26.5% year over year, mostly driven by acquisitions of ACAMS.
Adjusted operating income was $11.1 million, down 16.8% year over year.
Technology and Business: This segment, comprising Adtalem Brazil Institution, registered revenues of $82.9 million, increasing 11% year over year, owing to currency benefit.
This segment generated operating income of $19 million, reflecting a year-over-year increase of 29%.
US Traditional Postsecondary: This reporting segment includes results of DeVry University and Carrington College.
The segment registered revenues of $136.3 million, declining 21.3% year over year because of declining enrollments at DeVry University in Carrington.
This division incurred an operating loss (adjusted for special item) of $898 million against a loss of $1,178 million a year ago.
DeVry University generated revenues of $104 million in the quarter, down 23% due to continued enrollment declines.
In July 2017, undergraduate new student enrollments declined 11.4%, while total students fell 22.1%.
Fiscal 2017 Highlights
The company’s earnings came in at $2.79 per share in the fiscal year, increasing 15.8% year over year.
Total revenue of $1,809.8 million declined 1.8% year over year.
Fiscal 2018 Guidance
The company expects earnings per share for fiscal 2018 to grow in the low-single digit range. Total revenue is anticipated to be flat to down 1% for the year.
Capital spending is expected in the range of $65-$70 million for fiscal 2018. The effective income tax rate for the fiscal year is likely to be around 21-22%.
Fiscal First Quarter Guidance
Revenues are expected to be down 4-5% in the quarter on a year-over-year basis. First quarter operating costs, before special items, are expected to decline 4-5% year over year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
DeVry Education Group Inc. Price and Consensus
DeVry Education Group Inc. Price and Consensus | DeVry Education Group Inc. Quote
VGM Scores
Currently, the stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.