We Think Adtalem Global Education's (NYSE:ATGE) Robust Earnings Are Conservative

Even though Adtalem Global Education Inc.'s (NYSE:ATGE) recent earnings release was robust, the market didn't seem to notice. Our analysis suggests that investors might be missing some promising details.

View our latest analysis for Adtalem Global Education

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Adtalem Global Education's profit was reduced by US$36m, due to unusual items, over the last year. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Adtalem Global Education to produce a higher profit next year, all else being equal.

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. Based on this observation, we consider it likely that Adtalem Global Education's statutory profit actually understates its earnings potential! And the EPS is up 54% over the last twelve months. 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. So while earnings quality is important, it's equally important to consider the risks facing Adtalem Global Education at this point in time. For example - Adtalem Global Education has 1 warning sign we think you should be aware of.

Today we've zoomed in on a single data point to better understand 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. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.