Adtalem Global Education Inc (ATGE, Financial) has recently seen a daily gain of 10.94% and a 3-month gain of 10.58%. With an Earnings Per Share (EPS) of 2.08, the question arises: is the stock fairly valued? This article delves into a comprehensive valuation analysis of Adtalem Global Education, providing insights into its financial health and growth prospects.
A Brief Overview of Adtalem Global Education
Adtalem Global Education Inc is an American for-profit educational company that operates various university and educational programs. The company runs eight colleges and universities specializing in business, medicine, education, and nursing degree programs. With over 90 campuses and a variety of online courses offering associate, bachelor, and postgraduate degrees, Adtalem Global Education has established a significant presence in the education sector.
Understanding the GF Value of Adtalem Global Education
The GF Value is a unique measure that provides an estimate of the intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. A stock is considered overvalued if its price is significantly above the GF Value Line, and undervalued if it is significantly below it.
At its current price of $47.87 per share and a market cap of $2 billion, Adtalem Global Education appears to be fairly valued. This suggests that the long-term return of its stock is likely to be close to the rate of its business growth.
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Assessing the Financial Strength of Adtalem Global Education
Investing in companies with poor financial strength carries a higher risk of permanent capital loss. Adtalem Global Education's cash-to-debt ratio of 0.31 is lower than 75.69% of 255 companies in the Education industry, indicating fair financial strength with a GuruFocus rank of 6 out of 10.
Adtalem Global Education's Profitability and Growth
Profitable companies, especially those with consistent profitability over the long term, pose less investment risk. Adtalem Global Education has been profitable 8 out of the past 10 years, with an operating margin of 14.9%, ranking better than 67.97% of 256 companies in the Education industry. Its 3-year average annual revenue growth rate is 25.7%, ranking better than 84.26% of 235 companies in the Education industry. However, its 3-year average EBITDA growth rate is 7.8%, ranking worse than 51.08% of 186 companies in the Education industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) provides insight into its profitability. Adtalem Global Education's ROIC of 7.54 is lower than its WACC of 8.94, indicating the company is not generating enough returns on its invested capital.
Conclusion
In conclusion, Adtalem Global Education (ATGE, Financial) appears to be fairly valued. The company's financial condition is fair, and its profitability is strong. However, its growth ranks worse than 51.08% of 186 companies in the Education industry. To learn more about Adtalem Global Education's financials, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
