Adtalem Global Education Inc. ATGE has gained 21.2% in the past three months, outperforming the Zacks Schools industry, the Zacks Consumer Discretionary sector and the S&P 500 Index.

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This healthcare education provider and workforce solutions innovator is benefiting from a solid demand trajectory in the United States healthcare sector, the focus on its Growth with Purpose strategy and a balanced capital allocation strategy.

The Zacks Consensus Estimate for the company’s fiscal 2025 earnings per share has trended upward from $5.72 to $5.89 in the past 60 days. The estimated value indicates 17.6% year-over-year growth. Also, the earnings estimates for the fiscal second quarter indicate 13% growth from a year ago. The growth prospect is further solidified by a VGM Score of A, backed by Growth and Value Scores of A. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and prospects of an outperformance in the near term.

Although enrollment challenges in the Medical and Veterinary segment and increased costs and expenses are hindering ATGE’s prospects to some extent, the tailwinds mentioned above are pushing the boat toward growth.

Let us discuss the factors why investors must buy this Zacks Rank #2 (Buy) stock for now.

Here’s What Makes ATGE Stock a Solid Pick

Demand Trends in Healthcare: The demand for healthcare is growing and evolving in the United States as the sector is struggling with a significant shortage of talent, posing a threat to care quality and exacerbating health disparities in communities nationwide. Adtalem believes that its agile operating model positions it to allocate resources efficiently and to quickly meet the growing healthcare demands. The company’s recent collaboration with Hippocratic AI is a boost in this respect. This will help train healthcare professionals in the use of AI technologies and care delivery.

In the first quarter of fiscal 2025, Adtalem witnessed strong growth in the healthcare programs driven by social and behavioral health along with nursing demand. Total student enrollment across Walden and Chamberlain segments grew year over year by 12.2% and 11.7%, respectively. The growth was attributable to the evolving demand in U.S. healthcare, which is expected to back this growth trend through fiscal 2025 into fiscal 2026.

Growth With Purpose Strategy: On June 20, 2023, Adtalem announced the Growth With Purpose strategy, which is a three-year strategic initiative mainly focused on driving organic revenue growth. Through this initiative, the company will be tapping into five growth areas, including marketing, enrollment, retention, pricing and programs, through fiscal 2026 to reach the predetermined targets. The targets set for fiscal 2026, under this growth strategy (compared with fiscal 2023), include a compound annual growth rate of revenues between 4% and 6% and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin expansion of more than 200 basis points (bps).

Moving into the second year since announcing the Growth With Purpose strategy, the company has been witnessing strong revenue growth backed by demand strength at Chamberlain University and Walden University along with adjusted EBITDA margin expansion. Given the positive trajectory, Adtalem now expects its fiscal 2025 revenue guidance in the band of $1,690-$1,730 million compared with $1,660-$1,700 million expected earlier.

Capital Allocation Strategy: Adtalem focuses on a balanced approach toward capital allocation. Apart from utilizing its free cash flow in business investments, it ensures rewarding its shareholders through share repurchases and dividend payments. During the first quarter of fiscal 2025, the company repurchased 462,063 shares at an average price of $73.39 per share.

Furthermore, the company’s trailing 12-month return on equity (ROE) is indicative of its growth potential and focus on maintaining shareholder value. Its ROE of 15.6% compares favorably with the industry’s 9.4%, indicating more efficiency in using shareholders’ funds than peers.

Other Key Picks

Here are other top-ranked stocks from the same sector space.

Choice Hotels International, Inc. CHH currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CHH has a trailing four-quarter earnings surprise of 8.3%, on average. The stock has gained 24.4% in the past year. The Zacks Consensus Estimate for CHH’s 2025 sales and earnings per share (EPS) indicates growth of 3.2% and 4.7%, respectively, from the year-ago levels.

Interface, Inc. TILE presently sports a Zacks Rank of 1. TILE has a trailing four-quarter earnings surprise of 73.3%, on average. The stock has surged 96% in the past year.

The Zacks Consensus Estimate for TILE’s 2025 sales and EPS indicates an increase of 3% and 13.1%, respectively, from the year-ago levels.

Flexsteel Industries, Inc. FLXS currently sports a Zacks Rank of 1. FLXS has a trailing four-quarter earnings surprise of 12.7%, on average. The stock has soared 198.4% in the past year.

The Zacks Consensus Estimate for FLXS’ fiscal 2025 sales and EPS indicates an increase of 4.9% and 54%, respectively, from the year-ago levels.

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