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Afya (AFYA)
NASDAQ:AFYA
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Afya
(NASDAQ:AFYA)
Rating:84Outperform
Price Target:
$22.50
▲(24.24%Upside)
Positive Factors
Dividends
For the first time Afya announced a dividend payment, representing a 20% payout ratio and 1.5% div. yield.
Earnings
Adjusted EBITDA increased by 24% year over year and was above consensus estimates.
Guidance
The positive highlight was the strong guidance for 2025, which implies an 11% to 14% YoY growth on net revenues and EBITDA margin expansion.
Negative Factors
Course Enrollment
Residency prep courses continue to lose students with a decline of 17% year over year.
Industry Supply
The supply expansion in the industry may lead to longer-term ticket deterioration.
Taxation
New tax rule could harm future cash flow.
Afya (AFYA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.64B
Dividend Yield<0.01%
Average Volume (3M)142.94K
Price to Earnings (P/E)13.5
Beta (1Y)0.67
Revenue Growth1.79%
EPS Growth24.44%
CountryUS
Employees5,260
SectorHealthcare
Sector Strength59
IndustryEducation & Training Services
Share Statistics
EPS (TTM)0.58
Shares Outstanding46,586,056
10 Day Avg. Volume139,853
30 Day Avg. Volume142,943
Financial Highlights & Ratios
PEG Ratio0.27
Price to Book (P/B)2.32
Price to Sales (P/S)0.00
P/FCF Ratio13.58
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$20.67Price Target Upside14.14% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering3
Afya Business Overview & Revenue Model
Company DescriptionAfya (AFYA) is a leading medical education group in Brazil, focused on providing educational solutions and healthcare services. The company operates in the education sector, offering undergraduate and graduate courses primarily in medicine and healthcare-related fields. Afya's core products and services include medical education programs, digital healthcare solutions, and other educational content tailored to meet the needs of healthcare professionals.
How the Company Makes MoneyAfya primarily makes money through tuition fees from its educational programs, which form the largest part of its revenue stream. The company offers a wide range of undergraduate and graduate programs in medicine and other healthcare disciplines, attracting a significant number of students each year. In addition to tuition fees, Afya generates revenue from its digital healthcare services and educational content, which provide supplementary income. Significant partnerships with healthcare institutions and continuous expansion of its educational offerings contribute to its earnings, enhancing its market position in the Brazilian medical education sector.
Afya Earnings Call Summary
Earnings Call Date:May 09, 2025
(Q1-2025)
| % Change Since: -6.65%|
Next Earnings Date:Aug 14, 2025
Earnings Call Sentiment Positive
Afya reported strong financial performance with significant revenue, EBITDA growth, and strategic achievements like credit rating upgrades and ESG recognition. However, challenges such as a decrease in residency journey students and active users in the Medical Practice Solution segment, along with increased tax expenses, were noted.Q1-2025 Updates
Positive Updates
Strong Revenue and EBITDA Growth
Net revenue increased by 16% year-over-year to R$936 million, while adjusted EBITDA grew by almost 24% to R$492 million with a record margin of 52.5%.
Cash Flow and EPS Performance
Cash flow from operating activities rose by almost 10% to R$470 million, and EPS increased by 23% year-over-year, reaching R$2.79.
Significant Increase in Medical Students and Seats
The number of Undergrad Medical students grew by almost 50% compared to the first quarter of 2024, with approved medical seats increasing to 3,653 after the Funic acquisition.
Credit Rating Upgrade and ESG Recognition
Moody’s upgraded Afya’s national scale credit rating from AA+.br to AAA.br with a stable outlook, and MSCI awarded a BBB ESG rating.
Growth in Medical Practice Solution and Continuing Education Segments
Net revenue for Medical Practice Solution increased by 14%, and Continuing Education saw a 9% growth year-over-year.
Negative Updates
Decrease in Residency Journey Students
The number of students in the residency journey dropped by 70% to 12,203.
Active Users Decline in Medical Practice Solution
Monthly active users decreased from last year's 263,000 to 245,000, attributed to the transition from the PEBMED portal to the Afya portal.
Impact of New Tax Legislation
Income tax expenses increased by R$23 million due to the new OECD Pillar Two rules, affecting net income.
Company Guidance
During Afya's first conference call of 2025, the company highlighted several key financial metrics and strategic developments. The net revenue for the first quarter increased by 16% year-over-year, reaching R$936 million, with adjusted EBITDA rising by nearly 24% to R$492 million, resulting in a record margin of 52.5%. Net income also saw significant growth, up 23% to R$257 million, contributing to an EPS of R$2.79. The company reported a strong cash flow from operating activities of R$470 million, reflecting a 10% increase from the previous year and a cash conversion rate of 96.8%. Operationally, the number of approved medical seats rose by 12% to 3,593, and the number of Undergrad Medical students grew by nearly 50%, reaching almost 26,000. The Continuing Education segment saw a 9% organic increase in net revenue to R$71 million, while the Medical Practice Solution segment experienced 14% growth, reaching R$42 million. Additionally, Afya's Ecosystem expanded to include 317,000 active users. The company's financial discipline was further underscored by a national credit rating upgrade to AAA.br by Moody's, a first ESG rating of BBB from MSCI, and a net debt reduction to R$1,524 million by the end of the first quarter.Afya Financial Statement Overview
Summary
Afya's financial health is robust, with strong revenue growth, profitability, and cash flow generation. The company effectively manages its leverage while maintaining high margins and returns, indicative of a well-executed business strategy. Its balance sheet reflects stability with a healthy equity position, and cash flow metrics underscore its strong liquidity profile. Overall, Afya is well-positioned for continued growth and financial success.Income Statement
Afya has demonstrated robust growth in total revenue, showcasing a consistent upward trend over the years. The company achieved a gross profit margin of 63.22% and a net profit margin of 19.11% in 2024, indicating strong profitability. EBIT and EBITDA margins are also healthy at 30.63% and 36.86%, respectively, reflecting efficient operational management. Revenue growth rate from 2023 to 2024 is significant at 14.90%, reinforcing its strong market position.92
Very Positive
Balance Sheet
Afya maintains a strong balance sheet with a debt-to-equity ratio of 0.74, suggesting prudent leverage management. The return on equity (ROE) is impressive at 14.79% for 2024, demonstrating effective use of shareholders' funds. The equity ratio stands at 48.35%, indicating a solid equity base supporting its assets. The company’s financial stability is evident in its strategic management of liabilities and equity.85
Very Positive
Cash Flow
The company's cash flow is robust, with an operating cash flow to net income ratio of 2.27 in 2024, highlighting strong cash-generating capacity. Free cash flow grew by 62.26% from 2023 to 2024, showcasing enhanced liquidity and capacity for reinvestment or debt reduction. The free cash flow to net income ratio is 2.05, underscoring the company's ability to convert income into cash efficiently.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.30B | 2.88B | 2.33B | 1.72B | 1.20B | Gross Profit |
| 2.09B | 1.77B | 1.47B | 1.07B | 766.54M | EBIT |
| 1.01B | 767.06M | 664.10M | 440.89M | 363.33M | EBITDA |
| 1.22B | 1.11B | 856.35M | 541.80M | 433.11M | Net Income Common Stockholders |
| 631.51M | 386.32M | 373.57M | 223.33M | 292.07M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 911.01M | 553.03M | 1.09B | 748.56M | 1.05B | Total Assets |
| 8.83B | 7.58B | 7.20B | 6.45B | 4.79B | Total Debt |
| 3.17B | 2.68B | 2.71B | 2.16B | 1.14B | Net Debt |
| 2.26B | 2.12B | 1.62B | 1.41B | 96.33M | Total Liabilities |
| 4.52B | 3.94B | 3.95B | 3.45B | 1.96B | Stockholders Equity |
| 4.27B | 3.60B | 3.20B | 2.95B | 2.78B |
| Cash Flow | Free Cash Flow | |||
| 1.30B | 798.20M | 546.88M | 354.07M | 233.92M | Operating Cash Flow |
| 1.43B | 1.04B | 843.90M | 630.87M | 371.51M | Investing Cash Flow |
| -1.09B | -1.14B | -591.47M | -1.27B | -1.04B | Financing Cash Flow |
| 23.97M | -439.94M | 92.94M | 364.68M | 756.42M |
Afya Technical Analysis
Positive
18.11
Price Trends
18.39
Negative
17.64
Positive
16.89
Positive
Market Momentum
-0.21
Positive
47.16
Neutral
61.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFYA, the sentiment is Positive. The current price of 18.11 is below the 20-day moving average (MA) of 18.27, below the 50-day MA of 18.39, and above the 200-day MA of 16.89, indicating a neutral trend. The MACD of -0.21 indicates Positive momentum. The RSI at 47.16 is Neutral, neither overbought nor oversold. The STOCH value of 61.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AFYA.
Afya Risk Analysis
Afya disclosed 69 risk factors in its most recent earnings report. Afya reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Afya Peers Comparison
Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $1.64B | 13.53 | 15.78% | <0.01% | 1.79% | 24.44% | |
78 Outperform | $1.83B | 32.38 | 21.81% | ― | 14.69% | 188.00% | |
77 Outperform | $2.09B | 14.09 | 16.54% | 1.63% | 6.35% | 0.35% | |
73 Outperform | $2.03B | 17.98 | 6.86% | 2.86% | 5.72% | 11.02% | |
73 Outperform | $1.34B | ― | -10.84% | ― | 7.26% | 39.62% | |
55 Neutral | $1.19B | 35.79 | -13.54% | ― | 4.87% | -198.67% | |
54 Neutral | $5.38B | 3.27 | -45.10% | 3.30% | 16.81% | 0.02% |
* Healthcare Sector Average
Performance Comparison
AFYA
Afya
18.11
1.04
6.09%
PRDO
Perdoceo Education
31.85
11.65
57.67%
STRA
Strategic Education
83.95
-22.70
-21.28%
UTI
Universal Technical Institute
33.58
19.71
142.11%
COUR
Coursera
8.30
1.69
25.57%
KLC
KinderCare Learning Companies Inc
10.08
-17.96
-64.05%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.