PERDOCEO EDUCATION Corp (NASDAQ: PRDO)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001046568
Market Cap 2.84 Bn
P/B 3.06
P/E 42.39
P/S 1.73
ROIC (Qtr) 12.87
Div Yield % 0.47
Rev 1y % (Qtr) 24.76
Total Debt (Qtr) 64.62 Mn
Debt/Equity (Qtr) 0.06
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About

Perdoceo Education Corp, known by its ticker symbol PRDO, is a company that operates in the education industry, specifically providing postsecondary education primarily online to a diverse student population. The company boasts two accredited academic institutions under its wing: Colorado Technical University (CTU) and the American InterContinental University System (AIUS). Perdoceo's main business activities revolve around offering quality and accessible higher education opportunities for a diverse student population. This includes adult learners,...

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Investment thesis

Bull case

  • Strong operating cash flow of 202.73M provides robust 3.14x coverage of total debt 64.62M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 180.78M provide 16.31x coverage of short-term debt 11.08M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 959.07M provides 14.84x coverage of total debt 64.62M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 202.73M provides strong 17.77x coverage of stock compensation 11.41M, indicating sustainable incentive practices.
  • Operating cash flow of 202.73M provides exceptional 40.80x coverage of interest expenses 4.97M, showing strong debt service capability.

Bear case

  • Operating cash flow of 202.73M barely covers its investment activities of (144.87M), with a coverage ratio of -1.40, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 202.73M provides thin coverage of dividend payments of (35.93M) with a -5.64 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 180.78M provide limited coverage of acquisition spending of (136.91M), which is -1.32x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 52.32M relative to inventory of 4.02M (13.03 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 194.76M represents just -36.73x of debt issuance (5.30M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Education & Training Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EDU New Oriental Education & Technology Group Inc. 9.35 Bn 24.58 1.82 0.78 Bn
2 TAL TAL Education Group 6.18 Bn 22.22 2.20 0.38 Bn
3 GHC Graham Holdings Co 5.47 Bn 12.27 1.91 1.17 Bn
4 LAUR Laureate Education, Inc. 5.20 Bn 25.55 3.29 0.44 Bn
5 LOPE Grand Canyon Education, Inc. 4.62 Bn 21.85 4.23 0.11 Bn
6 LRN Stride, Inc. 3.61 Bn 11.32 1.43 0.56 Bn
7 ATGE Covista Inc. 3.46 Bn 13.66 1.83 0.73 Bn
8 PRDO PERDOCEO EDUCATION Corp 2.84 Bn 42.39 1.73 0.06 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.00 0.71
EV to Cash from Ops. EV/CFO 13.00 6.80
EV to Debt EV to Debt 40.21 11.15
EV to EBIT EV/EBIT 22.49 112.78
EV to EBITDA EV/EBITDA 12.21 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 17.32 5.57
EV to Market Cap EV to Market Cap 0.91 582,173.64
EV to Revenue EV/Rev 1.59 1.74
Price to Book Value [P/B] P/B 3.06 -3.80
Price to Earnings [P/E] P/E 42.39 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.34 11.73
Dividend Payout Ratio % Div Payout % (Qtr) 22.50 2.21
Dividend per Basic Share Div per Share (Qtr) 0.54 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 17.92 1.69
Interest Coverage Int. cover (Qtr) 43.66 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -73.00 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -24.30 25.11
Dividend Growth (1y) % Div 1y % (Qtr) 17.39 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 19.36 -39.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 38.12 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) 19.70 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) 17.37 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) 17.65 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) 27.64 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 16.93 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.62 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.17 0.01
Cash Ratio Cash Ratio (Qtr) 1.10 0.73
Current Ratio Curr Ratio (Qtr) 4.47 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.06 3.83
Interest Cover Ratio Int Coverage (Qtr) 43.66 53.05
Times Interest Earned Times Interest Earned (Qtr) 43.66 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 31.40 -30.62
EBIT Margin % EBIT Margin % (Qtr) 26.75 -82.13
EBT Margin % EBT Margin % (Qtr) 26.14 -47.07
Gross Margin % Gross Margin % (Qtr) 77.40 50.48
Net Profit Margin % Net Margin % (Qtr) 19.20 -48.61