Stock Analysis

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

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NYSE:ATGE
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Adtalem Global Education Inc. (NYSE:ATGE), is not the largest company out there, but it saw a decent share price growth in the teens level on the NYSE over the last few months. 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? Let’s examine Adtalem Global Education’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out the opportunities and risks within the US Consumer Services industry.

Is Adtalem Global Education Still Cheap?

Adtalem Global Education is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Adtalem Global Education’s ratio of 33.68x is above its peer average of 18.12x, which suggests the stock is trading at a higher price compared to the Consumer Services industry. In addition to this, it seems like Adtalem Global Education’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Adtalem Global Education generate?

earnings-and-revenue-growth
NYSE:ATGE Earnings and Revenue Growth December 5th 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. With profit expected to more than double in the upcoming, the future appears to be extremely bright for Adtalem Global Education. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in ATGE’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to 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 optimistic prospect is encouraging for ATGE, which means 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. Case in point: We've spotted 2 warning signs for Adtalem Global Education you should be aware of.

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.

What are the risks and opportunities for Adtalem Global Education?

Adtalem Global Education Inc. provides workforce solutions worldwide.

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Rewards

  • Trading at 50.6% below our estimate of its fair value

  • Became profitable this year

Risks

  • Earnings have declined by 16.6% per year over past 5 years

  • Significant insider selling over the past 3 months

  • Large one-off items impacting financial results

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Adtalem Global Education

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