Is It Time To Consider Buying Adtalem Global Education Inc. (NYSE:ATGE)?

By
Simply Wall St
Published
April 20, 2022
NYSE:ATGE
Source: Shutterstock

Adtalem Global Education Inc. (NYSE:ATGE), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Adtalem Global Education’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Adtalem Global Education

What is Adtalem Global Education worth?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 75.86x is currently well-above the industry average of 20.87x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Adtalem Global Education’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Adtalem Global Education?

earnings-and-revenue-growth
NYSE:ATGE Earnings and Revenue Growth April 20th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted revenue growth of 7.6% expected in the upcoming year, short term growth doesn’t seem like a key driver for a buy decision for Adtalem Global Education.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in ATGE’s outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe ATGE should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ATGE for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, we've found that Adtalem Global Education has 4 warning signs (1 is potentially serious!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Adtalem Global Education, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.