Perdoceo Education (PRDO) reported better-than-expected quarterly results on May 1, with a 22.9% drop in student enrollments at its American InterContinental University System (AIUS) leading to a 14.0% decline in revenue. The company saw continued growth at its Colorado Technical University and strong student retention at its academic institutions. Despite the enrollment decrease, adjusted earnings increased by 3.4% to 60 cents per share, surpassing analyst forecasts. The company also generated $53.3 million in free cash flow during the quarter, allowing it to initiate a dividend and repurchase shares.
With a growing cash balance of $642.4 million, PRDO still represents 40% of the stock’s current price, even after a 30% increase following the earnings report. The company’s full-year guidance anticipates further free-cash generation, with expectations of substantial enrollment growth and an increase in earnings outlook to $2.11-$2.27 per share. This implies an acceleration in bottom-line growth and a positive outlook for the company’s future performance. Despite potential profit-taking due to the recent stock surge, the momentum is expected to continue.
Julius Juenemann, CFA, the equity analyst and associate editor of the Forbes Special Situation Survey and Forbes Investor investment newsletters, recommends Perdoceo Education (PRDO) as a current pick in the Forbes Investor. The company’s solid operating performance, strong student retention, and anticipated enrollment growth make it an attractive investment opportunity. PRDO’s growth history and cash flow generation indicate the potential for continued success in the future, with expectations of even better performance than projected.
Forbes Investor offers insights into undervalued gems with significant upside potential, like PRDO, through its market-beating investment newsletter. Investors can access recommendations for PRDO and other promising stocks by subscribing to the Forbes Investor. The company’s financial performance, raised earnings outlook, and strategic initiatives suggest a positive outlook for shareholders. Despite the recent stock price surge, PRDO’s growth trajectory is expected to persist, making it an appealing pick for investors seeking long-term growth opportunities.
Perdoceo Education (PRDO) demonstrated strong performance in the first quarter, with higher-than-expected adjusted earnings and a significant increase in free cash flow. The company’s strategic adjustments and focus on student retention have contributed to its continued success, with expectations of further enrollment growth and increased earnings for the year. With a growing cash balance and positive outlook, PRDO represents a promising investment opportunity for those looking to capitalize on its growth potential and long-term success. Subscribe to Forbes Investor to access recommendations for PRDO and other promising stocks with significant upside potential.