Core Insights - The U.S. education sector is experiencing diverse growth driven by e-books, online learning platforms, demand for healthcare professionals, technology advancements, hybrid teaching models, and strategic acquisitions for global expansion [1][4] - Despite growth opportunities, companies in the Zacks Schools industry face challenges such as rising advertising costs, online education expenses, and competition from generative AI [1][8] Industry Overview - The Zacks Schools industry includes for-profit education companies offering undergraduate, graduate, and specialized programs in various fields such as finance, healthcare, and technology [3] - Companies also provide child-care services and career-oriented post-secondary courses, with some offering yoga classes and related merchandise [3] Trends Impacting the Industry - There is a rising demand for online education and healthcare professionals, with for-profit education companies adapting to virtual delivery methods and focusing on non-traditional education models [4][5] - Companies are implementing cost-saving measures, increasing technology use, and introducing new programs to enhance profitability and student outcomes [6] Financial Performance and Valuation - The Zacks Schools industry has a Zacks Industry Rank of 29, placing it in the top 12% of over 250 Zacks industries, indicating strong near-term prospects [10][11] - The industry's earnings estimates for 2025 have increased from $1.55 to $1.75 per share, reflecting growing analyst confidence [12] Stock Performance - Over the past year, the Zacks Schools industry has gained 1.8%, underperforming the broader Zacks Consumer Discretionary sector's 13% rise and the S&P 500's 19.6% increase [14] - The industry is currently trading at a forward P/E ratio of 16.2X, lower than the S&P 500's 22.2X and the sector's 18.9X [16] Notable Companies - **Adtalem Global Education Inc. (ATGE)**: Achieved a 10% increase in enrollment and a 105.7% stock surge over the past year, with earnings for fiscal 2025 expected to grow by 23.8% [19][20] - **Laureate Education, Inc. (LAUR)**: Maintained its position as the largest higher education provider in Mexico and Peru, with a stock increase of 49.6% and expected earnings growth of 11.9% for 2025 [23][24] - **Perdoceo Education Corporation (PRDO)**: Benefiting from improved enrollment trends and a 46% stock increase, with earnings for 2025 expected to grow by 5.2% [25][26] - **Strategic Education, Inc. (STRA)**: Focused on competency-based learning models, with a stock increase of 6.1% and expected earnings growth of 17.6% for 2025 [27][28]

Core Insights - Five stocks have been added to the Zacks Rank 1 (Strong Buy) List, indicating strong potential for investment Group 1: Company Earnings Estimates - Freshworks Inc. (FRSH) has seen a 4% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - SoftBank Group Corp. (SFTBY) has experienced a 3.3% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Adtalem Global Education Inc. (ATGE) has seen a 2.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - FinWise Bancorp (FINW) has experienced a significant 10.8% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Phibro Animal Health Corporation (PAHC) has seen a 5.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Core Viewpoint - The article compares Adtalem Global Education (ATGE) and Grand Canyon Education (LOPE) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Estimates - ATGE has a Zacks Rank of 2 (Buy), while LOPE has a Zacks Rank of 3 (Hold), indicating that ATGE's earnings estimate revision activity is more favorable [3] - The Zacks Rank emphasizes earnings estimates and revisions, which are critical for value investors [2] Group 2: Valuation Metrics - ATGE has a forward P/E ratio of 17.38, compared to LOPE's forward P/E of 20.67, suggesting ATGE may be undervalued [5] - The PEG ratio for ATGE is 1.16, while LOPE's PEG ratio is 1.38, indicating ATGE has a better expected EPS growth relative to its valuation [5] - ATGE's P/B ratio is 2.72, significantly lower than LOPE's P/B of 7.02, further supporting ATGE's valuation attractiveness [6] Group 3: Overall Value Assessment - ATGE earns a Value grade of B, while LOPE receives a Value grade of C, highlighting ATGE's stronger position in terms of value metrics [6] - Given the favorable Zacks Rank and Style Scores, ATGE is positioned as the better option for value investors at this time [7]

Core Viewpoint - Adtalem Global Education (ATGE) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - For Adtalem, the rising earnings estimates and the rating upgrade suggest an improvement in the company's underlying business, likely leading to increased stock prices [5][10]. Earnings Estimate Revisions - Adtalem is projected to earn $6.04 per share for the fiscal year ending June 2025, reflecting a year-over-year increase of 20.6% [8]. - Over the past three months, the Zacks Consensus Estimate for Adtalem has risen by 5.1%, indicating a positive trend in earnings expectations [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Adtalem to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [10].

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for successful short-term investing, highlighting that price movements alone may not be sufficient to predict future performance [1][2]. Group 1: Stock Performance - Adtalem Global Education (ATGE) has shown a solid price increase of 17.4% over the past 12 weeks, indicating strong investor interest [4]. - The stock has also increased by 12.8% over the last four weeks, suggesting that the upward trend is still intact [5]. - ATGE is currently trading at 92.1% of its 52-week high-low range, indicating a potential breakout [5]. Group 2: Fundamental Strength - ATGE holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. - The Zacks Rank 1 stocks have historically generated an average annual return of +25% since 1988, underscoring the effectiveness of this ranking system [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for investors to identify stocks like ATGE that are on an uptrend supported by strong fundamentals [3]. - In addition to ATGE, there are other stocks that meet the criteria of the "Recent Price Strength" screen, providing additional investment opportunities [8]. - The article suggests utilizing the Zacks Research Wizard to backtest stock-picking strategies, enhancing the likelihood of selecting profitable stocks [9].

Core Viewpoint - Adtalem Global Education Inc. (ATGE) reported better-than-expected results for the second quarter of fiscal 2025, with earnings and revenues surpassing estimates and showing year-over-year growth, primarily driven by strong enrollment growth and strategic initiatives [1][3]. Financial Performance - Adjusted earnings were $1.81 per share, exceeding the consensus estimate of $1.39 by 30.2% and increasing 47.2% from $1.23 in the same quarter last year [3]. - Revenues reached $447.7 million, beating the consensus estimate of $429 million by 4.4% and reflecting a year-over-year increase of 13.9% [3]. - Adjusted operating income rose 34.2% to $75.6 million, with an adjusted operating margin expanding by 350 basis points to 22.7% [4]. - Adjusted EBITDA was $125 million, up 35.1% year over year, with an adjusted EBITDA margin expanding 440 basis points to 27.9% [5]. Enrollment Growth - Total student enrollment increased by 11.6% year over year to 91,264 students, surpassing the Zacks model prediction of 88,001 [4]. - Chamberlain University saw revenues increase by 17.9% to $181 million, with enrollment rising 11.5% to 39,691 students [6]. - Walden University generated revenues of $171.3 million, up 16.7% year over year, with enrollment increasing 13.2% to 46,399 students [8]. - The Medical and Veterinary segment experienced a revenue increase of 2.8% to $95.4 million, but total enrollment fell 0.7% to 5,174 students [9]. Liquidity and Cash Flow - As of December 31, 2024, cash and cash equivalents were $193.6 million, down from $219.3 million as of June 30, 2024 [10]. - Long-term debt increased slightly to $649.9 million from $648.7 million [10]. - Cash provided by operating activities totaled $70.3 million for the first six months of fiscal 2025, down from $81.9 million in the prior year [10]. Fiscal 2025 Guidance - For fiscal 2025, ATGE raised its revenue expectations to a range of $1,730-$1,760 million, up from the previous estimate of $1,690-$1,730 million [11]. - Adjusted earnings guidance was also raised to a range of $6.10-$6.30 per share, compared to the earlier prediction of $5.75 to $5.95 [11].

Financial Performance - Adtalem's revenue reached $447.7 million, a 13.9% increase compared to the previous year[11,12,18] - Adjusted EBITDA margin was 27.9%, a 440 basis points increase year-over-year[12,18] - Adjusted EPS increased by 47.2% to $1.81[12,18] Enrollment Trends - Total enrollment grew by 11.6% year-over-year[10,16,18] - Chamberlain University's enrollment increased by 11.5%[13,22] - Walden University's enrollment increased by 13.2%[13,27] Cash Flow and Capital Allocation - Trailing twelve months free cash flow was $232 million[15,38] - The company repurchased $38 million of shares in Q2 2025[15] FY 2025 Guidance - Revenue is projected to be between $1.73 billion and $1.76 billion[41] - Adjusted EPS is expected to be between $6.10 and $6.30[41]

Earnings Performance - Quarterly earnings of $1.81 per share, beating the Zacks Consensus Estimate of $1.39 per share, representing a 30.22% earnings surprise [1] - Year-over-year earnings growth from $1.23 per share to $1.81 per share [1] - Previous quarter earnings of $1.29 per share, surpassing the expected $1.12 per share with a 15.18% surprise [1] - Company has surpassed consensus EPS estimates in the last four quarters [2] Revenue Performance - Quarterly revenues of $447.73 million, exceeding the Zacks Consensus Estimate by 4.38% [2] - Year-over-year revenue growth from $393.24 million to $447.73 million [2] - Company has topped consensus revenue estimates in the last four quarters [2] Stock Performance - Adtalem shares have gained 9.9% since the beginning of the year, outperforming the S&P 500's 2.7% gain [3] - Stock's immediate price movement depends on management's commentary on the earnings call [3] Earnings Outlook - Current consensus EPS estimate for the coming quarter is $1.68 on $438.91 million in revenues [7] - Current fiscal year consensus EPS estimate is $5.89 on $1.72 billion in revenues [7] - Estimate revisions trend for Adtalem is mixed, translating into a Zacks Rank 3 (Hold) [6] Industry Context - Schools industry is currently in the top 32% of the 250 plus Zacks industries [8] - Top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8] Peer Comparison - Strategic Education (STRA) expected to report quarterly earnings of $1.19 per share, a year-over-year decline of 29.2% [9] - Strategic Education's revenues expected to be $311.96 million, up 3.1% from the year-ago quarter [10] - Strategic Education's results for the quarter ended December 2024 expected to be released on February 27 [9]

Revenue Growth - Adtalem's revenue increased 13.9%, or $54.5 million, to $447.7 million in Q2 FY2025 compared to the prior year period, driven by increased revenue across all segments [149]. - Chamberlain revenue increased 17.9%, or $27.4 million, to $181.0 million in Q2 FY2025, driven by higher enrollment and tuition rates [151]. - Walden revenue increased 16.7%, or $24.5 million, to $171.3 million in Q2 FY2025, supported by increased enrollment and higher tuition rates [153]. - Fiscal year 2025 consolidated revenue increased by 9.4% to $372.6 million compared to the prior year [160]. Net Income and Earnings - Net income rose 90.2%, or $36.0 million, to $75.9 million in Q2 FY2025, primarily due to increased revenue and decreased litigation reserves [149]. - Diluted earnings per share increased 102.0%, or $1.00, to $1.98 in Q2 FY2025, attributed to the rise in net income and lower diluted shares from share repurchases [149]. - The company reported a net income of $122.0 million for the six months ended December 31, 2024, compared to $50.5 million in the same period of 2023 [219]. - Adjusted earnings per share (non-GAAP) for Q2 2024 was $1.81, up from $1.23 in Q2 2023, reflecting a 47% increase [220]. Enrollment Statistics - Total student enrollment at Chamberlain increased 11.5% for the November 2024 session compared to the same session last year [149]. - Walden's total student enrollment increased 13.2% as of December 31, 2024, compared to December 31, 2023 [149]. Operating Income - Consolidated operating income increased by 100.6%, or $87.3 million, to $174.1 million in the first six months of fiscal year 2025 [168]. - Chamberlain operating income increased 42.5%, or $12.6 million, to $42.2 million in the second quarter of fiscal year 2025 [172]. - Walden operating income increased 126.4%, or $27.3 million, to $48.9 million in the second quarter of fiscal year 2025 [173]. - Adjusted operating income for Chamberlain increased by 30.0% to $70.1 million in the first six months of fiscal year 2025 [168]. Expenses and Costs - Cost of educational services rose by 9.4%, or $31.9 million, to $372.6 million in the first six months of fiscal year 2025 [160]. - Student services and administrative expense increased by 0.8%, or $1.3 million, to $156.9 million in the second quarter of fiscal year 2025 [164]. - As a percentage of revenue, cost of educational services decreased to 43.1% in the first six months of fiscal year 2025 from 44.7% in the prior year [161]. - Student services and administrative expense as a percentage of revenue decreased to 36.5% in the first six months of fiscal year 2025 from 42.2% in the prior year [165]. Share Repurchase and Capital Expenditures - Adtalem repurchased 471,327 shares at an average cost of $79.60 per share during Q2 FY2025, with future repurchases dependent on market conditions [149]. - Capital expenditures for the six months ended December 31, 2024, were $21.1 million, compared to $19.6 million in the same period of 2023, with expectations for full fiscal year 2025 capital spending to be in the range of $55 to $65 million [202]. Tax and Other Financial Metrics - Effective tax rate from continuing operations increased to 22.8% in the three months ended December 31, 2024, compared to 17.1% in the prior year period [179]. - Interest expense decreased to $13.9 million in the second quarter of fiscal year 2025 from $16.7 million in the prior year period [175]. - Other income, net decreased to $2.2 million in the second quarter of fiscal year 2025 from $3.6 million in the prior year period [176]. Indemnification and Restructuring - The company received a $5.6 million indemnification claim in the second quarter of fiscal year 2025 [170]. - Restructuring expenses increased to $2.4 million in the first six months of fiscal year 2025 compared to $0.7 million in the prior year [166].

Enrollment Growth - Total enrollment increased by 11.6% year-over-year, reaching 91,264 students[1] - Chamberlain University reported an 11.5% increase in enrollment, achieving the highest total enrollment in its history[5] - Walden University experienced a 13.2% increase in enrollment, marking its sixth consecutive quarter of growth[5] - Chamberlain University enrolled over 3,000 MSN-PMHNP students, addressing critical healthcare workforce shortages[5] Revenue and Earnings - Revenue for the second quarter was $447.7 million, reflecting a 13.9% increase compared to the prior year[5] - Total consolidated revenue for the three months ended December 31, 2024, was $447.729 million, representing a 13.9% increase from $393.242 million in the same period of 2023[26] - Fiscal year 2025 revenue guidance was raised to a range of $1,730 million to $1,760 million, indicating approximately 9.0% to 11.0% growth year-over-year[10] - Adjusted earnings per share guidance for fiscal year 2025 is projected to be between $6.10 and $6.30, representing a growth of approximately 21.5% to 25.5% year-over-year[10] Income and Profitability - Diluted earnings per share were $1.98, with adjusted EPS at $1.81, marking a 47.2% growth year-over-year[1] - Operating income for the same period increased by 77.2% to $103.870 million, compared to $58.612 million in the prior year[26] - Income from continuing operations for the six months ended December 31, 2024, was $117.421 million, up from $49.672 million in 2023, marking a significant increase of 136.1%[24] - Basic earnings per share from continuing operations rose to $3.12 for the six months ended December 31, 2024, compared to $1.22 in the same period of 2023, reflecting a 155.7% increase[26] Segment Performance - Chamberlain segment revenue increased by 17.9% to $180.986 million for the three months ended December 31, 2024, from $153.553 million in 2023[26] - Walden segment revenue grew by 16.7% to $171.306 million for the three months ended December 31, 2024, compared to $146.808 million in the same period of 2023[26] Cash Flow and Financial Position - Cash, cash equivalents, and restricted cash at the end of the period were $195.419 million, down from $221.202 million at the beginning of the period[24] - The company reported a net cash provided by operating activities of $70.297 million for the six months ended December 31, 2024, compared to $81.868 million in 2023[24] - Free cash flow (non-GAAP) for Adtalem Global Education was $188,887,000 for the twelve months ended FY24 Q2, showing strong cash generation capabilities[44] Operating Income and Margins - Adtalem Global Education's GAAP operating income rose by 77.2% to $103,870,000 for the three months ended December 31, 2024, compared to $58,612,000 in 2023[36] - Walden's GAAP operating income surged by 126.4% to $48,898,000 for the three months ended December 31, 2024, from $21,598,000 in 2023[36] - Operating margin (GAAP) for Adtalem improved to 23.2% in Q4 2024 from 14.9% in Q4 2023[36] - Walden's operating margin (GAAP) increased to 28.5% for the three months ended December 31, 2024, compared to 14.7% in 2023[36] Adjusted Metrics - Adjusted EBITDA was $125.0 million, up 35.1% year-over-year, with an adjusted EBITDA margin of 27.9%[5] - Adjusted EBITDA for Adtalem Global Education increased by 35.1% to $125,012,000 for the three months ended December 31, 2024, compared to $92,555,000 in the same period of 2023[40] - Adjusted net income (non-GAAP) for Adtalem Global Education was $69,398,000 for the three months ended December 31, 2024, reflecting an increase from $50,268,000 in the same period of 2023[40] Debt and Expenses - Long-term debt as of December 31, 2024, stood at $658.283 million[46] - Net debt (non-GAAP) after accounting for cash and cash equivalents was $464.325 million[46] - Interest expense incurred during the period was $59.7 million[46] - Provision for income taxes amounted to $48.84 million[46] - Depreciation and amortization expenses totaled $66.875 million[46] - Stock-based compensation expenses were $33.36 million[46] - Restructuring expenses recorded were $3.542 million[46]