Statutory Profit Doesn't Reflect How Good Adtalem Global Education's (NYSE:ATGE) Earnings Are

Investors were underwhelmed by the solid earnings posted by Adtalem Global Education Inc. (NYSE:ATGE) recently. Our analysis says that investors should be optimistic, as the strong profit is built on solid foundations.

See our latest analysis for Adtalem Global Education

How Do Unusual Items Influence Profit?

To properly understand Adtalem Global Education's profit results, we need to consider the US$33m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Adtalem Global Education doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Adtalem Global Education's Profit Performance

Because unusual items detracted from Adtalem Global Education's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Adtalem Global Education's earnings potential is at least as good as it seems, and maybe even better! Furthermore, it has done a great job growing EPS over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that Adtalem Global Education has 1 warning sign and it would be unwise to ignore it.

This note has only looked at a single factor that sheds light on the nature of Adtalem Global Education's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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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.