Adtalem Global Education (ATGE): Assessing Valuation After Recent Share Price Uptick

Adtalem Global Education (ATGE) shares have seen a modest uptick in the past day, following steady performance trends for much of the month. Investors are watching how the company navigates ongoing industry shifts in the education sector.

See our latest analysis for Adtalem Global Education.

The 5.71% share price jump gives Adtalem some positive momentum after a rough patch. Despite sharper drawdowns in the past month, its one-year total shareholder return is a solid 9.56%, and the five-year total return sits at an impressive 249%. This backdrop suggests that, even with bumps along the way, long-term holders have seen meaningful wealth creation as the company adapts to changes in the education sector.

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As Adtalem Global Education’s price lags far behind analyst targets but boasts notable long-term returns, the question remains: is this moment a genuine buying opportunity, or is the market already anticipating future upside?

Price-to-Earnings of 14.3x: Is it justified?

Adtalem Global Education is trading at a price-to-earnings (P/E) ratio of 14.3x, notably lower than both its U.S. Consumer Services industry average and the wider peer group. With a last close of $97.49, this lower valuation compared to peers and industry benchmarks presents Adtalem as a potentially undervalued name in its sector.

The price-to-earnings ratio is a foundational measure for judging how much investors are willing to pay for each dollar of company earnings. For a company like Adtalem, which operates in an ever-evolving education sector, this ratio gives valuable perspective on whether the market is optimistic about its future profit growth or assigning more risk compared to faster-growing industry peers.

At 14.3x, Adtalem’s P/E stands not only below the industry average of 18.3x but also under the peer average of 14.8x. This suggests the market is either not fully pricing in Adtalem’s recent acceleration in earnings, or it prefers rivals with different risk profiles and growth trajectories. Compared to the estimated Fair Price-to-Earnings Ratio of 20.8x, there could be additional potential for a valuation re-rating upward if the company continues delivering solid results.

Explore the SWS fair ratio for Adtalem Global Education

Result: Price-to-Earnings of 14.3x (UNDERVALUED)

However, slower revenue growth or unforeseen regulatory shifts remain potential risks. These factors could impact Adtalem's valuation outlook moving forward.

Find out about the key risks to this Adtalem Global Education narrative.

Another View: What Does the SWS DCF Model Say?

While the low price-to-earnings ratio points to potential undervaluation, our SWS DCF model paints an even starker picture. This approach suggests Adtalem Global Education may be trading at a hefty 45.6% discount to its fair value. This highlights a sizeable gap between price and underlying fundamentals. Could the market be missing something about Adtalem's long-term prospects?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Adtalem Global Education for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 843 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Adtalem Global Education Narrative

If you enjoy taking a hands-on approach and want to analyze the numbers for yourself, it’s quick and easy to craft your own perspective. Do it your way

A great starting point for your Adtalem Global Education research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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