Adtalem Global Education (ATGE) Valuation Check After Recent Share Price Swings

Adtalem Global Education (ATGE) has been on investors’ radar after recent share price moves, including a month return of about 18% and a past 3 months decline of around 23%. Those swings invite a closer look.

See our latest analysis for Adtalem Global Education.

The recent 17.5% 1 month share price return, alongside a 23.4% 3 month share price decline and current price of $109.95, indicates a shift in momentum after a setback, while the 1 year and 3 year total shareholder returns of 16.5% and about 3x show how longer term holders have fared very differently.

If Adtalem’s move has your attention, this could be a good moment to see how it compares with other healthcare stocks that are also attracting interest in the market.

With Adtalem trading at $109.95, alongside an intrinsic discount estimate of about 49% and a value score of 6, investors now face a key question: is this genuine undervaluation, or is the market already pricing in future growth?

Price-to-Earnings of 15.5x: Is it justified?

On a P/E of 15.5x at a share price of $109.95, Adtalem Global Education screens as good value compared with both peers and the wider Consumer Services industry.

The P/E multiple tells you how much investors are paying today for each dollar of current earnings. For an education focused consumer services business like Adtalem, it is a quick way to compare what the market is asking for its profit stream versus similar companies.

Here, the current 15.5x P/E sits slightly below the peer average of 15.8x and below the US Consumer Services industry average of 17.4x, indicating that the market is not placing a premium price on Adtalem’s earnings. This is despite forecasts for earnings growth of 11.8% per year and a record where earnings have grown 18.9% per year over the past 5 years and 43.9% over the last year. When compared with an estimated fair P/E of 19x from the SWS fair ratio model, the current valuation appears meaningfully lower. The market could potentially move toward that level if those earnings trends continue to be supported.

Explore the SWS fair ratio for Adtalem Global Education

Result: Price-to-Earnings of 15.5x (UNDERVALUED)

However, you also have to weigh risks, including any slowdown in annual revenue or net income growth, as well as potential shifts in demand for healthcare education programs.

Find out about the key risks to this Adtalem Global Education narrative.

Another View: What Does The DCF Say?

While the 15.5x P/E points to good value, our DCF model goes further by estimating fair value at about $214.14 per share versus the current $109.95 price, which suggests Adtalem could be significantly undervalued. The real question is how comfortable you are with the assumptions behind that cash flow outlook.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Adtalem Global Education for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 884 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Adtalem Global Education Narrative

If you see the numbers differently or prefer to rely on your own work, you can build a personalised view in just a few minutes, starting with Do it your way.

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Adtalem Global Education.

Looking for more investment ideas?

If you are weighing up your next move, do not stop at one stock when there are plenty of focused ideas built directly from the Simply Wall St screener.

• Spot potential value opportunities by scanning these 884 undervalued stocks based on cash flows that currently trade at prices the market may not fully appreciate yet.
• Ride powerful themes in technology by checking out these 26 AI penny stocks that are tied to artificial intelligence trends across different industries.
• Strengthen your income focus by reviewing these 12 dividend stocks with yields > 3% that already offer yields above 3% on current prices.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com