When Should You Buy Adtalem Global Education Inc. (NYSE:ATGE)?

By
Simply Wall St
Published
March 19, 2021
NYSE:ATGE
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Adtalem Global Education Inc. (NYSE:ATGE), might not be a large cap stock, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Adtalem Global Education’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Adtalem Global Education

What is Adtalem Global Education worth?

Great news for investors – Adtalem Global Education is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 7.65x is currently well-below the industry average of 22.54x, meaning that it is trading at a cheaper price relative to its peers. However, given that Adtalem Global Education’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Adtalem Global Education?

earnings-and-revenue-growth
NYSE:ATGE Earnings and Revenue Growth March 20th 2021

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Adtalem Global Education, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Although ATGE is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to ATGE, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on ATGE for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Adtalem Global Education as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Adtalem Global Education has 1 warning sign and it would be unwise to ignore it.

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.

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This article by Simply Wall St is general in nature. 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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