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Why Is Adtalem (ATGE) Up 7.5% 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 7.5% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Adtalem Q3 Earnings Beat Estimates, Enrollment Up Y/Y
Adtalem Global Education Inc. reported impressive earnings in third-quarter fiscal 2020. Its earnings not only topped the Zacks Consensus Estimate but also grew strongly on a year-over-year basis backed by new student enrollments, employer partnerships and prudent cost management across the business.
As the near-term financial impact of the COVID-19 pandemic is uncertain, it withdrew its previously issued guidance for fiscal 2020.
In the quarter under review, adjusted earnings came in at 81 cents per share, which topped the consensus mark of 67 cents by 20.9%. Earnings also grew 26.6% year over year on the back of solid enrollments and cost-saving initiatives.
Revenues & Operating Discussion
Adtalem reported revenues of $271.5 million, which lagged the consensus mark of $272.4 million by 0.3% but increased 4.9% year over year. During the fiscal third quarter, enrollment of new and total students grew 11.3% and 4.6% year over year, respectively.
Adjusted operating income from continuing operations of $56.3 million increased 18% year over year.
Segment Details
Medical and Healthcare: Revenues in the segment rose 1.7% from the year-ago figure to $227.3 million.
In Chamberlain, revenues grew 5.4% year over year. New and total student enrollment increased 11.2% and 4.6% year over year in the January session, respectively. In the March session, the metrics rose 12.7% and 5.1%, respectively.
Medical and Veterinary schools’ revenues fell 3.3% year over year, mostly due to COVID-19-led reduced clinical weeks in March. Enrollment of new and total students grew 3.2% and 1.7% year over year, respectively, in January.
Adjusted operating income in the segment was $57.6 million, up 8.7% from the prior-year level. The upside was backed by strong enrollment for Chamberlain and reduced travel and discretionary spend, partially offset by corporate costs related to its former Business and Law segment.
Financial Services: Revenues in the segment totaled $44.1 million, up 22.8% year over year. Revenues at Becker decreased 5.3% year over year. OnCourse Learning contributed 19.3% to total revenues. However, revenues were somewhat impacted by the sale of Becker’s healthcare assets. Operating income declined 17.6% from the prior-year quarter to $4.2 million due to corporate costs.
Liquidity & Cash Flow
As of Mar 31, 2020, Adtalem had cash and cash equivalents of $167.8 million compared with $230.7 million in the corresponding year-ago period and $204.2 million at fiscal 2019-end. In the first nine months of fiscal 2020, cash provided by operating activities totaled $105.5 million compared with $128.5 million of cash provided by operating activities in the comparable year-ago period.
During the fiscal third quarter, Adtalem repurchased 1.2 million shares of common stock at an average purchase price of $31.67 for a total of $36.9 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -33.52% due to these changes.
VGM Scores
Currently, Adtalem has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. 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. Notably, Adtalem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Adtalem (ATGE) Up 7.5% 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 7.5% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Adtalem Q3 Earnings Beat Estimates, Enrollment Up Y/Y
Adtalem Global Education Inc. reported impressive earnings in third-quarter fiscal 2020. Its earnings not only topped the Zacks Consensus Estimate but also grew strongly on a year-over-year basis backed by new student enrollments, employer partnerships and prudent cost management across the business.
As the near-term financial impact of the COVID-19 pandemic is uncertain, it withdrew its previously issued guidance for fiscal 2020.
In the quarter under review, adjusted earnings came in at 81 cents per share, which topped the consensus mark of 67 cents by 20.9%. Earnings also grew 26.6% year over year on the back of solid enrollments and cost-saving initiatives.
Revenues & Operating Discussion
Adtalem reported revenues of $271.5 million, which lagged the consensus mark of $272.4 million by 0.3% but increased 4.9% year over year. During the fiscal third quarter, enrollment of new and total students grew 11.3% and 4.6% year over year, respectively.
Adjusted operating income from continuing operations of $56.3 million increased 18% year over year.
Segment Details
Medical and Healthcare: Revenues in the segment rose 1.7% from the year-ago figure to $227.3 million.
In Chamberlain, revenues grew 5.4% year over year. New and total student enrollment increased 11.2% and 4.6% year over year in the January session, respectively. In the March session, the metrics rose 12.7% and 5.1%, respectively.
Medical and Veterinary schools’ revenues fell 3.3% year over year, mostly due to COVID-19-led reduced clinical weeks in March. Enrollment of new and total students grew 3.2% and 1.7% year over year, respectively, in January.
Adjusted operating income in the segment was $57.6 million, up 8.7% from the prior-year level. The upside was backed by strong enrollment for Chamberlain and reduced travel and discretionary spend, partially offset by corporate costs related to its former Business and Law segment.
Financial Services: Revenues in the segment totaled $44.1 million, up 22.8% year over year. Revenues at Becker decreased 5.3% year over year. OnCourse Learning contributed 19.3% to total revenues. However, revenues were somewhat impacted by the sale of Becker’s healthcare assets. Operating income declined 17.6% from the prior-year quarter to $4.2 million due to corporate costs.
Liquidity & Cash Flow
As of Mar 31, 2020, Adtalem had cash and cash equivalents of $167.8 million compared with $230.7 million in the corresponding year-ago period and $204.2 million at fiscal 2019-end. In the first nine months of fiscal 2020, cash provided by operating activities totaled $105.5 million compared with $128.5 million of cash provided by operating activities in the comparable year-ago period.
During the fiscal third quarter, Adtalem repurchased 1.2 million shares of common stock at an average purchase price of $31.67 for a total of $36.9 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -33.52% due to these changes.
VGM Scores
Currently, Adtalem has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. 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. Notably, Adtalem has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.