Perdoceo Education (PRDO) blew away all expectations with its quarterly report last night. Indeed, driven by contributions from its recent acquisitions of Coding Dojo and California Southern University and the further improvement in student retention and engagement that’s been supported by various operating changes and technology upgrades within PRDO’s onboarding, academic and student support processes, Q2 revenue climbed 11.3% from the prior year to $186.6 million, which easily beat the $179.4 million analyst forecast. And with PRDO also continuing to do an excellent job enhancing operating efficiencies in admissions and marketing, adjusted earnings jumped 45.2% to 61 cents per share, which was 9 cents better than expected.
This solid operating performance also allowed PRDO to produce a whopping $60.0 million in free cash flow during the quarter and increase its cash pile by about the same amount to $578.1 million, which translates into a ridiculous $8.44 in net cash per share or still more than half of its current share price even after today’s substantial bounce of more than 14%. The good news is that the company finally decided to do something substantial with this bounty by declaring an inaugural quarterly cash dividend of 11 cents per share. On an annual basis, this indicates a nice yield of 2.8%. This could finally draw more attention to the stock’s perpetually cheap valuation—which continues to trade at less than 9 times even the low end of PRDO’s updated full-year adjusted earnings per share outlook of $1.85-1.92 (up from its prior view of $1.68-1.86)—by income-seeking investors. If so, I see substantial additional upside for the stock ahead.
Julius Juenemann, CFA is the equity analyst and associate editor of the Forbes Special Situation Survey and Forbes Investor investment newsletters. Perdoceo Education (PRDO) is a current recommendation in the Forbes Investor. To access this and the other stocks being recommended through the Forbes Investor, click here to subscribe.
Read the full article here
