Over the past six months, Adtalem’s stock price fell to $101.10. Shareholders have lost 15.9% of their capital, which is disappointing considering the S&P 500 has climbed by 9.1%. This may have investors wondering how to approach the situation.

Is now the time to buy Adtalem, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Do We Think Adtalem Will Underperform?

Even with the cheaper entry price, we're sitting this one out for now. Here are three reasons you should be careful with ATGE and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Adtalem grew its sales at a 13.9% compounded annual growth 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.

2. Cash Flow Margin Set to Decline

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Over the next year, analysts predict Adtalem’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 19.5% for the last 12 months will decrease to 17.3%.

3. Previous Growth Initiatives Haven’t Impressed

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Adtalem historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 10.6%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

Final Judgment

We see the value of companies helping consumers, but in the case of Adtalem, we’re out. After the recent drawdown, the stock trades at 12.4× forward P/E (or $101.10 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are better stocks to buy right now. We’d recommend looking at a safe-and-steady industrials business benefiting from an upgrade cycle.

Stocks We Would Buy Instead of Adtalem

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The names generating the next wave of massive growth are right here in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.