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Is It Time To Consider Buying Adtalem Global Education Inc. (NYSE:ATGE)?

Simply Wall St
·4 mins read

Adtalem Global Education Inc. (NYSE:ATGE), which is in the consumer services business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Adtalem Global Education’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Adtalem Global Education

Is Adtalem Global Education still cheap?

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. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Adtalem Global Education’s ratio of 12.66x is below its peer average of 25.05x, which indicates the stock is trading at a lower price compared to the Consumer Services industry. Another thing to keep in mind is that Adtalem Global Education’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Adtalem Global Education generate?

NYSE:ATGE Past and Future Earnings April 12th 2020
NYSE:ATGE Past and Future Earnings April 12th 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Adtalem Global Education, it is expected to deliver a relatively unexciting earnings growth of 9.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Adtalem Global Education, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since ATGE is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on ATGE for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ATGE. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Adtalem Global Education. You can find everything you need to know about Adtalem Global Education in the latest infographic research report. If you are no longer interested in Adtalem Global Education, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.