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Comments (21)

dkozar profile picture
I'm long PRDO. One point I did not see in the comments is that PRDO is making acquisitions. With the addition of Trident, their student body has grown substantially. And in the Q3 call they announced two additional acquisitions that provide training capacity to complement current student needs. And another acquisition is coming down the pike this year.

My guess is that their trying to diversify their training approaches with students. I'm curious about the next acquisition actually. And they still have a connection with the earlier spin-off they had done with the intellipath product. My guess is that its sales volume is increasing due to the need for other universities to invest in learning through artificial intelligence.

Bottom line with this company, their sitting on a pile of cash that totals more than 1/2 of the market cap. Even if one assumes risk, this company is not very risky. And, fingers crossed, I reckon there are uglier for-profit education companies that would be more likely to capture the attention of the Dept. of Ed.
It should say "heads" in the title, not "head".
Maschuette profile picture
@rec2 I had to google this after you brought it up. Seems you can say "head or tail" or "heads or tails." But you should stay consistent so still a fair point. LOL
abacab profile picture
The bearish story is not just regulatory pressure. The company has a terrible product, which can fail on its own. Their "improving margins" result from cutting teaching expenses to near zero; they are just a marketing machine. After many years of declining enrollments, they have stabilized by cherry-picking (as discontinued) all the weakest schools/programs. It seems likely that the same pattern recurs, that enrollments resume their decline, and that the company fails. If they try to teach-out, without robust new enrollments, they suffer staggering losses. The stock is a zero.
@abacab Yes, and also the fraudy CEO. His last two companies have imploded with fraud allegations, including ones directly naming him (www.nytimes.com/...). Value trap. Anyone trusting this management is insane.
Maschuette profile picture
I agree with this article. I bought a little in sept and was planning on adding as the price continued to fall but it hasnt. Now this bullish article will probably help facilitate the climb so i had to add to my position today.
Hydra Research profile picture
@Maschuette I've been long since Feb 2021, but the pressure on this name is really hard to beat. This is a good opportunity but only for patient people in my opinion. We might not see a dramatic change in multiples before the next mid term elections.
Maschuette profile picture
@Marco Brecciaroli Yeah you are probably right about that. At that time the stock would probably jump for the same reason CXW will jump though. Of course, CXW has already had a negative executive order against them, but it hasn't added up to much.

Either way, that's not a long time to wait. I wont add much more unless the stock drops more. Thanks for the article.
Hydra Research profile picture
@Maschuette thank you for the feedback. I'm actually bearish on CXW tbh, but that's another story.
Long PRDO.
Your downside is too optimistic. They likely will have to teach out current students. That would drain all the cash.

That said, agree with general points.
Hydra Research profile picture
@stevemcclearn I don't think that thanks to their almost-all-online business model they could limit expenses a lot, and the current students will continue to pay. If the stringent regulations will only imply a ban on accepting new students PRDO has the infrastructure to continue producing cash.
Boris J profile picture
@stevemcclearn Not necessarily. Argosy simply shut down and turned out the lights
@stevemcclearn if they have to teach out the students, they can cut down marketing from ~$50mm/quarter to ~$0. They can also cut admissions. The company is now 100% online (except for corp offices) so they are a lot more scalable both up and down than when they had to teach out campuses. So in the scenario of teaching out students they should generate significant cash flows as opposed to drain cash.
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