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Adtalem's (ATGE) Stock Down on Q4 Earnings & Revenue Miss

Zacks Equity Research
·4 mins read

Adtalem Global Education Inc. ATGE reported lackluster results for fourth-quarter fiscal 2020, wherein earnings and revenues lagged the Zacks Consensus Estimate, as well as declined year over year. Shares of the company fell 9.4% in the after-hours trading session on Aug 18, post the earnings release.

Despite being confident about long-term revenue and earnings growth, it did not provide its guidance for fiscal 2021 owing to uncertain economic conditions.

For the quarter under review, adjusted earnings came in at 58 cents per share, which missed the consensus mark of 61 cents by 4.9%. The metric also declined 12.1% year over year.

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

Revenues & Operating Discussion

Revenues of $259.7 million lagged the consensus mark of $260.4 million by 0.3% and decreased 1.7% year over year due to COVID-19 impacts. During the fiscal fourth quarter, enrollment of new and total students grew 5.9% and 6.9% year over year, respectively.

Adjusted operating income from continuing operations of $40 million decreased 23.2% year over year.

Segment Details

Medical and Healthcare: Revenues in the segment slipped 0.1% from the year-ago figure to $211.4 million.

In Chamberlain, revenues grew 9.1% year over year. New and total student enrollment for the May session increased 5.4% and 8.2% year over year, respectively.

Medical and Veterinary schools’ revenues decreased 12.9% year over year, mostly due to COVID-19-led reduced clinical weeks at the medical schools and the loss of housing revenues. Enrollment of new students grew 9.7%, while total students fell 0.7% year over year. Adjusted operating income in the segment was $40 million, down 0.3% from the prior-year level.

Financial Services: Revenues in the segment totaled $48.3 million, down 9.7% year over year, given cancellation of ACAMS in person conferences and lower contribution from Becker Accounting. Revenues at Becker decreased 14.4% year over year due to the delay of CPA testing owing to the COVID-19 pandemic and constrained customer spending. OnCourse Learning contributed 10.1% to total revenues. However, revenues were impacted by the sale of Becker’s healthcare assets. Adjusted operating income declined 46.9% from the prior-year quarter to $8.5 million.

Liquidity & Cash Flow

As of Jun 30, 2020, Adtalem had cash and cash equivalents of $500.5 million compared with $204.2 million at fiscal 2019-end. In fiscal 2020, cash provided by operating activities totaled $107.7 million compared with $204.9 million in the year-ago period.

Fiscal 2020 Highlights

Adjusted earnings of $2.28 fell just 0.4% from the fiscal 2019 level. Revenues for fiscal 2020 rose 3.8% from the prior year to $1.05 billion. However, adjusted operating income fell 9.1% year over year to $166.1 million.

Zacks Rank & Peer Releases

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

Strategic Education, Inc. or SEI STRA reported stellar results for second-quarter 2020, wherein earnings and revenues not only topped analysts’ expectations but also grew from the year-ago level. The uptick was mainly backed by strong top-line numbers, and margins in Strayer and Capella universities.

American Public Education, Inc. APEI reported impressive second-quarter 2020 results, wherein both the top and bottom lines topped the Zacks Consensus Estimate, as well as grew on a year-over-year basis. Notably, the metrics exceeded management’s respective guidance on the back of enrollment growth across the segments and the ongoing turnaround at Hondros.

Lincoln Educational Services Corporation LINC posted better-than-expected earnings for second-quarter 2020. Encouragingly, the bottom line grew an impressive 116.7% year over year, backed by cost-saving initiatives. The company’s stock gained 1.5% on Aug 11, after the earnings release.

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