Adtalem Global (ATGE) Q4 Earnings: A Surprise In Store?

Adtalem Global Education Inc. (NYSE:ATGE) , a global provider of education services, is slated to release fourth-quarter fiscal 2017 financial numbers on Aug 17, after the closing bell.

Last quarter, the company delivered a positive earnings surprise of 9.38%. It delivered positive earnings surprises in all the trailing four quarters with the average beat being 10.54%.

Factors at Play

Enrollments have been sluggish for the school companies over the last few quarters, due to regulatory challenges, changes and competition in the higher education industry. Like other for-profit education companies, Adtalem too has been witnessing a persistent decline in enrollments at its flagship institution, DeVry University. Notably, the company’s revenue is expected to be down 1-2% in fiscal 2017 compared with the prior year. It had expected for a mid single-digit new student enrollment growth for the remaining fiscal-year 2017.

Nonetheless, Adtalem is making progress toward launching new slate of program offerings, more directly aimed at meeting student preferences and employer needs in fiscal 2017. The company’s cost-saving initiatives, transformation strategy and plans to introduce more stackable programs in 2017 should drive growth in the yet-to-be-reported quarter.

For fiscal 2017, the company expects earnings per share to grow in the mid-teen range.

For the fiscal fourth quarter, the Zacks Consensus Estimate for earnings is pegged at 72 cents, reflecting a 10% year-over-year increase. Also, revenues for the current quarter are pegged at $454.5 million, implying a 3.7% decrease year over year.

Earnings Whispers

Our proven model does not conclusively show that Adtalem is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: Adtalem’s Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 72 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Adtalem’s Zacks Rank #3 increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.

We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

American Public Education, Inc. (NASDAQ:APEI) reported second-quarter 2017 earnings per share of 23 cents, which came in line with the Zacks Consensus Estimate. Earnings plunged considerably by 43.9% year over year due to declining revenues because of sluggishness in enrollments.

Strayer Education Inc. (NASDAQ:STRA) reported second-quarter 2017 earnings of 92 cents per share, beating the Zacks Consensus Estimate of 89 cents by 3.4%. Also, earnings surged 28% year over year.

Capella Education Company (NASDAQ:CPLA) reported adjusted earnings of 90 cents in the second quarter of 2017, which surpassed the Zacks Consensus Estimate of 80 cents by 12.5%. Adjusted earnings however declined 3.2% year over year.

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