As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the education services industry, including Adtalem (NYSE: ATGE) and its peers.
A whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.
The 8 education services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was in line.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5% since the latest earnings results.
Adtalem (NYSE: ATGE)
Formerly known as DeVry Education Group, Adtalem Global Education (NYSE: ATGE) is a global provider of workforce solutions and educational services.
Adtalem reported revenues of $462.3 million, up 10.8% year on year. This print exceeded analysts’ expectations by 2%. Despite the top-line beat, it was still a mixed quarter for the company with a beat of analysts’ EPS estimates but full-year revenue guidance meeting analysts’ expectations.
Adtalem delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 34.7% since reporting and currently trades at $92.58.
Is now the time to buy Adtalem? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Lincoln Educational (NASDAQ: LINC)
Established in 1946, Lincoln Educational (NASDAQ: LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.
Lincoln Educational reported revenues of $141.4 million, up 23.6% year on year, outperforming analysts’ expectations by 7.5%. The business had a stunning quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Lincoln Educational pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 15.7% since reporting. It currently trades at $20.59.
Is now the time to buy Lincoln Educational? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Grand Canyon Education (NASDAQ: LOPE)
Founded in 1949, Grand Canyon Education (NASDAQ: LOPE) is an educational services provider known for its operation at Grand Canyon University.
Grand Canyon Education reported revenues of $261.1 million, up 9.6% year on year, in line with analysts’ expectations. It was a slower quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ EPS estimates.
Grand Canyon Education delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 11.6% since the results and currently trades at $157.61.
Read our full analysis of Grand Canyon Education’s results here.
Strategic Education (NASDAQ: STRA)
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ: STRA) is a career-focused higher education provider.
Strategic Education reported revenues of $319.9 million, up 4.6% year on year. This print surpassed analysts’ expectations by 1.7%. It was an exceptional quarter as it also produced a beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
Strategic Education had the slowest revenue growth among its peers. The stock is up 4.4% since reporting and currently trades at $78.08.
Read our full, actionable report on Strategic Education here, it’s free for active Edge members.
Universal Technical Institute (NYSE: UTI)
Founded in 1965, Universal Technical Institute (NYSE: UTI) is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.
Universal Technical Institute reported revenues of $222.4 million, up 13.3% year on year. This number topped analysts’ expectations by 1.3%. Overall, it was a strong quarter as it also logged a beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is down 22.4% since reporting and currently trades at $22.87.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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