ATGE - Embedded Expectations Analysis - 2021 10 13
Adtalem Global Education Inc. (ATGE:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 25.3x Uniform P/E. Even at these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about the strength of education demand, nursing enrollment, and the Walden acquisition.Specifically, management may have concerns about the overall sustainability of demand for their programs and offerings as well as the potential of their Called-to-Care Scholars Program and Emory Healthcare partnership. They may also lack confidence in their ability to maintain revenue growth at ACAMS, OnCourse Learning, and Becker. Moreover, they may lack confidence in their ability to drive long-term growth through new offerings, establish a market-leading position in the health care sector, and play a larger role in addressing worker shortages through the Walden acquisition.
Adtalem Global Education provides educational services. The company's institutions and companies provide an array of programs across medical and healthcare, financial services and business and law. The company's segments include: Medical and Healthcare, which includes Chamberlain University and Medical and Veterinary Schools that provide educational programs in nursing and health professions, respectively; Financial Services, which includes Becker Professional Education that provides education serving the accounting and finance professions; and Business and Law, which includes Adtalem Education of Brazil institution that focuses in business, engineering, healthcare, law, management, medical and technology.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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