It's not a stretch to say that Adtalem Global Education Inc.'s (NYSE:ATGE) price-to-earnings (or "P/E") ratio of 16.7x right now seems quite "middle-of-the-road" compared to the market in the United States, where the median P/E ratio is around 17x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/E.
With earnings growth that's exceedingly strong of late, Adtalem Global Education has been doing very well. It might be that many expect the strong earnings performance to wane, which has kept the P/E from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Adtalem Global Education will help you shine a light on its historical performance.
What Are Growth Metrics Telling Us About The P/E?
The only time you'd be comfortable seeing a P/E like Adtalem Global Education's is when the company's growth is tracking the market closely.
Retrospectively, the last year delivered an exceptional 277% gain to the company's bottom line. However, this wasn't enough as the latest three year period has seen a very unpleasant 39% drop in EPS in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.
In contrast to the company, the rest of the market is expected to grow by 11% over the next year, which really puts the company's recent medium-term earnings decline into perspective.
In light of this, it's somewhat alarming that Adtalem Global Education's P/E sits in line with the majority of other companies. Apparently many investors in the company are way less bearish than recent times would indicate and aren't willing to let go of their stock right now. Only the boldest would assume these prices are sustainable as a continuation of recent earnings trends is likely to weigh on the share price eventually.
What We Can Learn From Adtalem Global Education's P/E?
We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
We've established that Adtalem Global Education currently trades on a higher than expected P/E since its recent earnings have been in decline over the medium-term. When we see earnings heading backwards and underperforming the market forecasts, we suspect the share price is at risk of declining, sending the moderate P/E lower. If recent medium-term earnings trends continue, it will place shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.
The company's balance sheet is another key area for risk analysis. You can assess many of the main risks through our free balance sheet analysis for Adtalem Global Education with six simple checks.
Of course, you might also be able to find a better stock than Adtalem Global Education. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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可以毫不誇張地說 Adtalem Global Education Inc.s(紐約證券交易所代碼:ATGE)市盈率(或 “市盈率”)目前爲16.7倍,與市盈率中位數約爲17倍的美國市場相比,似乎相當 “處於中間位置”。但是,如果市盈率沒有合理的基礎,投資者可能會忽略明顯的機會或潛在的挫折。
我們已經確定,Adtalem Global Education目前的市盈率高於預期,因爲其最近的收益在中期內有所下降。當我們看到收益倒退且表現低於市場預期時,我們懷疑股價有下跌的風險,從而使溫和的市盈率走低。如果最近的中期收益趨勢持續下去,將使股東的投資面臨風險,潛在投資者面臨支付不必要的溢價的危險。
該公司的資產負債表是風險分析的另一個關鍵領域。您可以通過我們對Adtalem Global Education的免費資產負債表分析,通過六張簡單的檢查來評估許多主要風險。