Vocational education company Adtalem Global Education (NYSE: ATGE) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 11.5% year on year to $457.1 million. The company’s full-year revenue guidance of $1.92 billion at the midpoint came in 1.8% above analysts’ estimates. Its non-GAAP profit of $1.66 per share was 8.3% above analysts’ consensus estimates.

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Company Overview

Formerly known as DeVry Education Group, Adtalem Global Education (NYSE: ATGE) is a global provider of workforce solutions and educational services.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Adtalem grew its sales at a 11.2% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Adtalem’s annualized revenue growth of 11% over the last two years aligns with its five-year trend, suggesting its demand was consistently weak.

This quarter, Adtalem reported year-on-year revenue growth of 11.5%, and its $457.1 million of revenue exceeded Wall Street’s estimates by 4%.

Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will face some demand challenges.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Adtalem’s operating margin has risen over the last 12 months and averaged 18.3% over the last two years. On top of that, its profitability was top-notch for a consumer discretionary business, showing it’s an well-run company with an efficient cost structure.

In Q2, Adtalem generated an operating margin profit margin of 16.8%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Adtalem’s EPS grew at a spectacular 23.8% compounded annual growth rate over the last five years, higher than its 11.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q2, Adtalem reported adjusted EPS at $1.66, up from $1.37 in the same quarter last year. This print beat analysts’ estimates by 8.3%. Over the next 12 months, Wall Street expects Adtalem’s full-year EPS of $6.68 to grow 11.5%.

Key Takeaways from Adtalem’s Q2 Results

It was great to see Adtalem’s full-year revenue guidance top analysts’ expectations. We were also happy its revenue outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 2.3% to $122 immediately after reporting.

Indeed, Adtalem had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.