Adtalem (NYSE:ATGE) Surprises With Strong Q1, Guides For Strong Full-Year Sales
Stock Story
Published May 02, 2024 04:48PM ET
Updated May 02, 2024 05:01PM ET
Adtalem (NYSE:ATGE) Surprises With Strong Q1, Guides For Strong Full-Year Sales
Vocational education company Adtalem Global Education (NYSE:ATGE) beat analysts' expectations in Q1 CY2024, with revenue up 11.8% year on year to $412.7 million. The company's full-year revenue guidance of $1.57 billion at the midpoint also came in 1.8% above analysts' estimates. It made a non-GAAP profit of $1.50 per share, improving from its profit of $1.13 per share in the same quarter last year.
Is now the time to buy Adtalem? Find out by reading the original article on StockStory, it's free.
Adtalem (ATGE) Q1 CY2024 Highlights:
- Revenue: $412.7 million vs analyst estimates of $391.7 million (5.4% beat)
- EPS (non-GAAP): $1.50 vs analyst estimates of $1.16 (29.7% beat)
- The company lifted its revenue guidance for the full year from $1.54 billion to $1.57 billion at the midpoint, a 1.9% increase
- Gross Margin (GAAP): 57.5%, up from 55.1% in the same quarter last year
- Free Cash Flow of $142.1 million is up from -$22.38 million in the previous quarter
- Market Capitalization: $1.98 billion
Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.
Education ServicesA whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.
Sales GrowthReviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Adtalem's annualized revenue growth rate of 7.6% over the last five years was weak for a consumer discretionary business. Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Adtalem's annualized revenue growth of 11.1% over the last two years is above its five-year trend, suggesting some bright spots.
Get The News You Want
This quarter, Adtalem reported robust year-on-year revenue growth of 11.8%, and its $412.7 million of revenue exceeded Wall Street's estimates by 5.4%. Looking ahead, Wall Street expects sales to grow 4.7% over the next 12 months, a deceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, Adtalem has shown decent cash profitability, giving it some reinvestment opportunities. The company's free cash flow margin has averaged 10.7%, slightly better than the broader consumer discretionary sector.
Adtalem's free cash flow came in at $142.1 million in Q1, equivalent to a 34.4% margin and up 43.9% year on year. Over the next year, analysts predict Adtalem's cash profitability will fall. Their consensus estimates imply its LTM free cash flow margin of 15.6% will decrease to 10.4%.
Key Takeaways from Adtalem's Q1 Results
We were impressed by how significantly Adtalem blew past analysts' EPS expectations this quarter. We were also excited its revenue outperformed Wall Street's estimates as it recorded 85,809 student enrollments.
Looking ahead, the company raised its full-year revenue and EPS guidance significantly beating Wall Street's projections. Overall, we think this was a strong quarter that should satisfy shareholders. The stock is flat after reporting and currently trades at $52.4 per share.
Written By: Stock Story
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.