Market decline overshadows strong performance, outlook by Perdoceo Education (PRDO)

Perdoceo Education (PRDO) ends 2022 in style. In fact, the company announced last night’s fourth quarter results that American Intercontinental University System (AIUS) student enrollments were down year-on-year due to previously reported COVID-related dynamics and adjustments made to the PRDO’s marketing process. The Colorado Technical University (CTU) grew for the second straight quarter with a 2.0% increase in enrollment thanks to its corporate partnership program. As a result, the company’s overall subscriber count fell by just 3.0% (following the significant decline it experienced in the first half of 2022). Including learners participating in non-degree professional development programs or non-degree, Title IV self-study programs further reduces enrollment declines.

This higher-than-expected student retention and engagement helped revenue grow 10.2% to $176.2 million over the period, easily exceeding analyst estimates of $164.8 million. And as the PRDO continues to do an excellent job of improving operational efficiencies in admissions and marketing, adjusted earnings fell below expectations by 22.5% to 31 cents per share, the upper end of the company’s guidance27. ~ over 30 cents. It must also absorb certain non-recurring investments that academic institutions have made in human capital, marketing, and other operational processes during the quarter.

In addition, this solid performance helped the company generate an additional $37 million in free cash flow during the fourth quarter. Therefore, after spending approximately $45 million to acquire Coding Dojo in December 2022, Coding Dojo will remain an educational technology company that provides upskilling and reskilling opportunities in technology and various computer programming languages. PRDO’s cash balance decreased by just $7 million to $518 million. And because the company is debt-free, this huge cash pile represents net cash of $7.57 per share, or about 56% of the current stock value.

More importantly, PRDO’s new marketing strategy has led to a continuation of the steady marginal improvement in student engagement that began in the fourth quarter of 2021, which is likely to succeed at either of PRDO’s two universities. To further improve our focus on identifying future students. — Now fully annualized, the company sees even greater student retention and engagement. As a result, the company believes he could earn 55-57 cents a share in the first quarter, suggesting 10-14% year-over-year growth. Even at the lower end of the $1.63 to $1.85 adjusted earnings per share the PRDO forecasts for the full year 2023, the midpoint is also 7% year-over-year, given the stock is still trading below 9x. shows solid growth. I believe today’s sluggish reaction to this news is due to overall market weakness. We fully expect the stock to resume its recent uptrend in the short term.