Covista Inc. (CVSA) stock intrinsic value fair value estimate & owner earnings analysis

Covista (formerly Adtalem Global Education) operates three groups of schools aimed at healthcare and professional careers: Walden University (online graduate and professional programs; $804.9 million of fiscal 2026 revenue and 48,116 students in June 2026, up 15% in a year), Chamberlain University (nursing; $750.2 million) and the Caribbean medical and veterinary schools American University of the Caribbean, Ross University School of Medicine and Ross University School of Veterinary Medicine ($398.9 million). Almost all revenue is tuition, and most of it is paid with federal student aid, so federal rules matter more to value than competitors do. What the business earns. We measure the cash the business produces for its owners: operating cash flow, less one-off swings in receivables, payables and prepaid tuition, less stock compensation (a real cost), less the capital spending needed just to stay in place. Per diluted share that was $2.42 in fiscal 2022 (the year Walden was bought), then $3.39, $3.83, $6.34 and $8.96 for fiscal 2023 through 2026. Before interest, the business generated about $208 million, $212 million, $290 million and $365 million in those four years. Years before Walden describe a different company (DeVry University, Becker) and are not used. We anchor on the four full years since Walden joined, whose median is about $250 million a year. Fiscal 2026 includes roughly $50 million of extra cash-tax deferral from the 2025 tax law's accelerated deductions (deferred taxes of $68 million against $18 million a year earlier), which we do not treat as repeatable; adjusted, fiscal 2026 is about $315 million and fiscal 2025 about $290 million. Two consecutive years well above the four-year median support a higher near-term level, and we use it only for the next two years. Growth check: owner cash earnings rose 41% per share in fiscal 2026 (26% in total dollars); the first year of our base case assumes $300 million, below the adjusted fiscal 2026 figure, so no reversal of a slowdown is assumed. We left inside the cost base both the capitalized cloud-software spending ($14 million in 2026, $33 million in 2025) and lease payments, because they recur. Debt. The company owes $673 million: a $510 million Term Loan B due March 2033 at about 6% and a $163 million revolver drawn at year-end and repaid on July 1, 2026. It held $406 million of cash. Tuition is collected ahead of terms and the year-end cash balance has been about $200-220 million for three years, so we treat $225 million as working float and count only the $181 million above it. Net debt is therefore about $492 million, or about $14 per share on roughly 34.8 million diluted shares. The interest rate is close to what we would assume anyway, so no adjustment was made. The revolver requires net leverage at or below 3.25 times, and $202.6 million of surety-backed letters of credit back the Department of Education through September 2027. Bear case: worth about $33. The federal loan limits that began July 1, 2026 (Grad PLUS closed to new borrowers, new annual and lifetime caps) bind on Walden and medical-school starters as already-enrolled students graduate, and the earnings-based eligibility test effective July 1, 2027 removes some programs whose graduates do not out-earn bachelor's degree holders for two years in three. Business cash flow falls from $280 million in fiscal 2027 to $230 million, $170 million, and then $120 million a year from fiscal 2030 through 2036, then fades 6% a year. That level is what the company actually produced in fiscal 2018-2021 (about $115 million a year on average) after the 2012-2016 for-profit education contraction and the 2020 pandemic year. The business is worth about $1.70 billion ($48.8 per share); it owes about $15.5 per share (net debt plus about $47 million of extra interest if the 2033 loan is refinanced at wider spreads), leaving about $33. Cash flow stays about four times the roughly $30 million interest bill, so the debt can be carried. Base case: worth about $85. Cash flow holds at $300 million for fiscal 2027-2028, supported by the students already enrolled and by the two years of results above, then steps down to $265 million from fiscal 2029 as the loan limits and earnings test take a partial toll, and stays flat for the rest of the ten years, then fades 4% a year. The business is worth about $3.44 billion ($98.7 per share), it owes about $14.1 per share, leaving about $85. No growth is credited. Walden's accelerating enrollment, new programs, margin widening and new Chamberlain campuses are not secured or proven repeatable at this scale, so they are left out. Bull case: worth about $152. The levers the company already runs execute: tuition increases of 3.4% to 4.5% a year (demonstrated in fiscal 2026) and the enrolled Walden base carry cash flow from $350 million in fiscal 2027 up 4% a year through fiscal 2034, flat through 2036, then fading 3% a year. The business is worth about $5.78 billion ($165.9 per share), it owes about $14.1 per share, leaving about $152. What we tested. The base case rests on Walden holding its earnings. Walden produced $239.7 million of segment earnings in fiscal 2026, more than half of the three segments' $463 million, at a 30% margin. Chamberlain is a warning that enrollment does not equal profit: pre-licensure enrollment rose and revenue grew 3.4%, but segment earnings fell 6.3% to $143.6 million as costs grew faster. That is why the base case holds the level flat and steps it down rather than crediting growth. Not reconciled from the filings: borrower-defense claims are pending against Walden (9,031), Chamberlain (3,224), Ross medical (1,958), Ross veterinary (2,020) and AUC (390). None has been approved and no amount is determinable, so they are not separately modeled. The previous analysis (September 2026) was built on a different basis and its figures are not comparable. Why the margin-of-safety price is $27. We are moderately sure of the earnings level: the last two years are corroborated by enrollment, but they are only two years, and the federal rules that took effect on July 1, 2026 have no operating history. The worst plausible event is federal action against Walden's loan eligibility or a large borrower-defense recoupment; that would be worse than our bear case, though Chamberlain and the medical schools produced about $224 million of segment earnings before roughly $44 million of corporate costs. The balance sheet would survive: debt matures in 2033 and is small relative to cash flow. If we are wrong on the loan limits, Walden's margin or the tax deferral, the shares are worth about $33 in the bear path. The price assumes a holding period of three to four years. The company pays no dividend but repurchased $239.9 million of stock in fiscal 2026 and has $661.8 million of authorization left through December 2028; even fiscal 2025's owner earnings of $6.34 per share equal about 23% of a $27 price each year, which is how the base case implies a 20% annual return while the bear path is still in view.