Afya (AFYA) AI Stock Analysis

• Market Cap: $1.31B
• Dividend Yield: <0.01%
• Average Volume (3M): 102.82K
• Price to Earnings (P/E): 10.8
• Beta (1Y): 0.71
• Revenue Growth: 1.79%
• EPS Growth: 24.44%
• Country: US
• Employees: 5,260
• Sector: Consumer Defensive
• Sector Strength: 65
• Industry: Education & Training Services
• EPS (TTM): 0.59
• Shares Outstanding: 46,586,056
• 10 Day Avg. Volume: 145,556
• 30 Day Avg. Volume: 102,822
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.61
• Enterprise Value/Revenue: 0.64
• Enterprise Value/Gross Profit: 1.02
• Enterprise Value/Ebitda: 1.69
• 1Y Price Target: $18.63
• Price Target Upside: 25.45% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

• Rating: 73 Outperform
• Price Target: $15.50 ▲(4.38% Upside)

Afya's overall stock score is driven by its strong financial performance and reasonable valuation, which are partially offset by bearish technical indicators. The earnings call provided positive insights into the company’s growth and strategic developments, although some operational challenges were noted. Technical analysis indicates potential for further downside, which dampens the overall score.

Positive Factors

Earnings Growth

Adjusted EBITDA increased by 24% year over year and was above consensus estimates.

Margins and Cash Conversion

Margins were ahead of already high expectations, with strong cash conversion.

Negative Factors

Industry Supply

The supply expansion in the industry may lead to longer-term ticket deterioration.

Student Enrollment

Residency prep courses continue to lose students with a decline of 17% year over year.

Tax Implications

New tax rule could harm future cash flow.

Afya Business Overview & Revenue Model

Company Description

Afya Limited, through its subsidiaries, operates as a medical education group in Brazil. It offers educational products and services, including medical schools, medical residency preparatory courses, graduate courses, and other programs to lifelong medical learners enrolled across its distribution network, as well as to third-party medical schools. The company also provides digital health services, such as subscription-based mobile app and website portal that focuses on assisting health professionals and students with clinical decision-making through tools, such as medical calculators, charts, and updated content, as well as prescriptions, clinical scores, medical procedures and laboratory exams, and others. It offers health sciences courses, which comprise medicine, dentistry, nursing, radiology, psychology, pharmacy, physical education, physiotherapy, nutrition, and biomedicine; and degree programs and courses in other subjects and disciplines, including undergraduate and post graduate courses in business administration, accounting, law, civil engineering, industrial engineering, and pedagogy. In addition, the company provides medical postgraduate specialization programs; printed and digital content; and an online medical education platform and practical medical training services. As of December 31, 2021, it operated a network of 46 undergraduate and graduate medical school campuses consisted of 30 undergrad operating units and five approved units; and a network of 2,731 medical school seats that consisted of 2,481 operating seats and 278 approved seats. The company was founded in 1999 and is headquartered in Nova Lima, Brazil.

How the Company Makes Money

Afya generates revenue through multiple streams primarily centered around its educational offerings. The company earns income from tuition fees paid by students enrolled in its undergraduate and graduate programs. Additionally, Afya monetizes its medical residency preparatory courses and continuing medical education programs, which are designed to support healthcare professionals throughout their careers. Strategic partnerships with healthcare institutions and educational organizations further bolster its revenue by expanding its reach and enhancing its course offerings. The integration of technology in delivering its educational content also allows Afya to optimize costs and scale its operations efficiently.

Afya Financial Statement Overview

Summary

Afya demonstrates robust financial health 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.

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.

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.

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.

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
EBITDA	1.22B	1.11B	856.35M	541.80M	433.11M
Net Income	631.51M	386.32M	373.57M	223.33M	292.07M
Balance Sheet
Total Assets	8.83B	7.58B	7.20B	6.45B	4.79B
Cash, Cash Equivalents and Short-Term Investments	911.01M	553.03M	1.09B	748.56M	1.05B
Total Debt	3.17B	2.68B	2.71B	2.16B	1.14B
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

• Technical Analysis Sentiment: Neutral
• Last Price: 14.85
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFYA, the sentiment is Neutral. The current price of 14.85 is above the 20-day moving average (MA) of 14.70, below the 50-day MA of 16.50, and below the 200-day MA of 16.81, indicating a neutral trend. The MACD of -0.64 indicates Negative momentum. The RSI at 44.08 is Neutral, neither overbought nor oversold. The STOCH value of 74.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AFYA.

Afya Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PRDO	78 Outperform	$1.90B	12.72	16.39%	1.69%	15.99%	13.25%
COUR	75 Outperform	$1.99B	―	-8.40%	―	7.10%	49.18%
UTI	73 Outperform	$1.74B	32.23	23.11%	―	14.69%	188.00%
AFYA	73 Outperform	$1.31B	10.83	15.78%	<0.01%	1.79%	24.44%
STRA	71 Outperform	$1.79B	15.57	6.89%	3.11%	4.31%	-1.08%
Sector *	63 Neutral	$20.32B	12.52	-7.33%	3.14%	2.92%	-10.01%
KLC	55 Neutral	$1.16B	35.79	-13.54%	―	4.87%	-198.67%