Perdoceo Education: A Once Distressed Company Now Trading At A Premium

Summary

• PRDO's recent earnings beat and raised guidance drove a stock surge, but the valuation now exceeds historical averages, raising caution.
• Despite strong financials and a capital-light, high-margin model, PRDO is highly dependent on federal funding and faces significant regulatory risk.
• The for-profit education sector is in structural decline, with negative public perception and tightening regulations threatening long-term growth.
• Given unpredictable regulatory headwinds and binary risk to revenue, I rate PRDO a SELL for long-term investors, despite recent momentum.

Tara Moore

Thesis

Perdoceo Education Corporation (PRDO) is a for-profit postsecondary education company that owns five institutions: Colorado Technical University [CTU], California Southern University, Trident University International, University of St. Augustine for Health Sciences, and American InterContinental University System [AIUS]. The stock is up 20% year-to-date (32% over the

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.