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Adtalem (ATGE) Q1 Earnings & Revenues Miss on Lower Enrollment

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  • ATGE
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Adtalem Global Education Inc.’s ATGE shares dropped a meager 0.7% in the after-hours trading session on Nov 3, after its first-quarter fiscal 2021 earnings release. The company’s earnings and revenues lagged the respective Zacks Consensus Estimate.

Despite strong revenues, its earnings also decreased on a year-over-year basis due to higher cost of Educational Services and Student Services as well as administrative expense.

In this connection, Steve Beard, president and CEO of Adtalem said, “New student enrollments decreased during the quarter – particularly in nursing – primarily due to COVID-related headwinds in our post-licensure programs. We expect these headwinds to subside over time and believe that demand for healthcare professionals will continue to outpace supply for the foreseeable future, which creates stronger growth opportunities for Adtalem going forward.”

Adtalem Global Education Inc. Price, Consensus and EPS Surprise

Adtalem Global Education Inc. Price, Consensus and EPS Surprise
Adtalem Global Education Inc. Price, Consensus and EPS Surprise

Adtalem Global Education Inc. price-consensus-eps-surprise-chart | Adtalem Global Education Inc. Quote

Earnings & Revenues Discussion

Adjusted earnings of 62 cents per share missed the consensus mark of 74 cents and decreased from 78 cents a year ago.

Revenues for the quarter totaled $348.3 million, lagging the consensus mark by 1% but increasing 29.9% year over year driven by the Walden acquisition. For the fiscal first quarter, enrollment of new and total students dropped 14.1% and 4.5% year over year, respectively.

The company’s overall adjusted operating income rose 0.4% from the prior-year quarter to $54.6 million due to higher revenues, partially offset by increased costs from a return to in-person campus instruction, new campus expenses and a rise in marketing expense.

Segment Details

Chamberlain: Revenues in the segment increased 1.4% from the year-ago figure to $135.6 million. New student enrollment for the September session decreased 13.4% and total student enrollment declined 2.8% from the prior-year level. This depicts a return to historical norms from record-high enrollment levels in the comparable period. This was primarily attributable to COVID-related headwinds in post-licensure programs.

Walden: This segment generated revenues of $68.6 million. New and total student enrollment in the September session decreased 15.5% and 5.5%, respectively, year over year.

Medical and Veterinary: Revenues in the segment were unchanged from the year-ago figure at $84.8 million. New student enrollment decreased 4.6% and total student enrollment declined 6.9% from the prior-year level. This is due to declines at RUSM.

Financial Services: Revenues in the segment totaled $59.3 million, which increased 19.9% year over year driven by a rise in revenues at ACAMS, OnCourse Learning and Becker. ACAMS revenues rose as non-conference certification offerings continue to perform well and conference revenues tend to recover. OnCourse Learning’s persistent focus on execution in a favorable mortgage market and strength in the education business drove revenues for the quarter. Becker’s revenue growth stemmed from persistent improvement in the ongoing education program offerings and an increase in CPA exam preparation revenues.

Liquidity & Cash Flow

As of Sep 30, 2021, Adtalem had cash and cash equivalents of $360.1 million compared with $494.6 million at fiscal 2021-end. For the quarter, cash provided by operating activities totaled $40.9 million compared with $79.9 million in the year-ago period.

Guidance

For fiscal 2022, Adtalem expects revenues within $1,685-$1,735 million and adjusted earnings per share in the $4.20-$4.45 band. The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $1.71 billion and that of adjusted earnings is $4.30 per share, indicating 54% and 44.3% growth, respectively.

Zacks Rank

Adtalem currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3 Consumer Discretionary Stocks to Bet On

Some better-ranked stocks in the Zacks Consumer Discretionary space include Golden Entertainment, Inc. GDEN, Camping World Holdings, Inc. CWH and RCI Hospitality Holdings, Inc. RICK. Golden Entertainment sports a Zacks Rank #1, while Camping World and RCI Hospitality carry a Zacks Rank #2 (Buy).

Golden Entertainment’s 2021 earnings are expected to surge 232.1%.

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