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Adtalem (ATGE) Q3 Earnings Beat, Total Enrollments Down

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Adtalem Global Education Inc. (ATGE - Free Report) reported third-quarter fiscal 2018 results, with earnings surpassing the Zacks Consensus Estimate but revenues missing the same.

Adjusted earnings of 72 cents per share surpassed the Zacks Consensus Estimate of 71 cents. On a year-over-year basis, earnings increased 22%.

Quarterly revenues of $342.2 million marginally missed the Zacks Consensus Estimate of $343.9 million. Total revenues, however, increased 2.9% from the year-ago figure. Meanwhile, although total student enrollments decreased 2.4%, new student enrollments rose 3.2%.

The company’s total operating cost and expenses contracted 0.1% year over year to $288.4 million in the quarter. Operating income was $53.8 million, an increase of 22.4% from the prior-year quarter.

Adtalem Global Education Inc. Price, Consensus and EPS Surprise

 

Adtalem Global Education Inc. Price, Consensus and EPS Surprise | Adtalem Global Education Inc. Quote

Segment Details

Medical and Healthcare: In the fiscal third quarter, segmental revenues of $220.1 million increased 5.7% from the year-ago level, led by growth at Chamberlain University, and the medical and veterinary schools.

At Chamberlain, revenues rose 2.9%. New student enrollment increased 4.3% and total student count grew 4.5%.

Revenues from the medical and veterinary schools grew 10% year over year. New student enrollment and total student enrollment advanced 11.5% and 1.3%, respectively.

Operating income at the segment was $60.3 million, up 20.2% from the prior-year quarter.

Professional Education: The segment registered revenues of $31.5 million, up 5.7% year over year, primarily driven by revenue growth at ACAMS.

Operating income was $2.4 million, lower than $2.6 million recorded in the prior-year quarter.

Technology and Business: This segment registered revenues of $59 million, down 4.5% year over year. The downside was mainly due to the process delays in Brazilian public loan programs that impacted student enrollment.

This segment incurred operating loss of $0.1 million against operating income of $5.4 million in the year-ago period.

US Traditional Postsecondary:  The segment registered revenues of $32.1 million, down 4.2% year over year.

This division incurred an operating loss of $0.3 million compared with a loss of $3.1 million a year ago.

New student enrollment at Carrington was down 5.2% and total student enrollment decreased 8% in the quarter.

During the second quarter, Adtalem signed an agreement to transfer the ownership of DeVry University to Cogswell Education. The deal is expected to close in early fiscal 2019. As a result, DeVry University has been classified as a discontinued operation.

Q4 Guidance

Revenues are expected to increase 1-2% year over year. Although the Medical and Healthcare, as well as Professional Education segments are expected to register growth; Technology and Business, and US Traditional Postsecondary segments will likely witness a top-line decline.

Operating costs (before special items) are expected to be flat to up 1% from the prior-year quarter.

Fiscal 2018 Guidance

The company expects earnings per share growth (before special item) of 10-12%.

Total revenues are anticipated to increase 1-2%.

Capital spending is estimated in the range of $60-$65 million.

The effective income tax rate is likely to be around 14-16% (16-17% projected earlier).

Zacks Rank & Upcoming Peer Releases

Currently, Adtalem carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Strayer Education Inc. (STRA - Free Report) reported first-quarter 2018 adjusted earnings of $1.23 per share, beating the Zacks Consensus Estimate of $1.11 by 10.8%. However, earnings improved 29.5% year over year.

Capella Education Company reported adjusted earnings of $1.20 per share in the first quarter of 2018, surpassing the Zacks Consensus Estimate of $1.16 by 3.5%. In the year-ago quarter, earnings were 94 cents.

Upcoming Peer Release

American Public Education (APEI - Free Report) is scheduled to report first-quarter 2018 results on May 8. The Zacks Consensus Estimate for earnings is pegged at 34 cents, reflecting an expected 21.4% year-over-year growth.

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