Perdoceo Education Corporation
PRDO Details
Perdoceo Education Corporation (NASDAQ: PRDO) offers primarily online post-secondary education to a diverse student population, along with campus-based and blended learning programs. The company’s accredited institutions include the Colorado Technical University (CTU) and the American InterContinental University System (AIU), which provide industry-relevant and career-focused degree programs. As of June 09, 2021, the company’s market capitalization stood at USD 889.66 million.
FY20 Student Enrollment (Source: Investor Presentation, March 2021)
Q1FY21 Results: The company reported a slight decline of 7.39% in net revenue to USD 183.64 million in Q1FY21 (ending March 31, 2021) as compared to USD 170.99 million in Q1FY20. 57.62% of the total revenue was generated from the CTU segment during Q1FY21. However, net income for Q1FY21 increased to USD 30.75 million from USD 29.11 million reported in Q1FY20.
Key Risks: The company derives a substantial portion of its revenue and cash flows from Title IV programs, which assist students in financing their education. Around 74% of all PRDO’s students during FY20 participated in Title IV programs. As a result, any reduction in the program funding or the ability of the students to participate in the program could materially reduce the number of student enrollments, revenue, and profitability of the company. In addition, since PRDO’s institutions are primarily online-based, any failure in the information technology system whether through malicious activity or technological error could negatively impact its brand name and financial position.
Outlook:
Q2FY21 & FY21 Outlook (Source: Company Press Release, June 05, 2021)
Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation
(Data Source: REFINITIV, Analysis by Kalkine Group)
PRDO Daily Technical Chart (Source: REFINITIV)
Stock Recommendation: PRDO stock slumped 27.14% in the past 12 months and is currently leaning towards the lower end of the 52-week range of USD 10.62 to USD 17.71. The stock is currently trading close to its 200 DMA level. On the technical chart, the next support level is USD 11.16. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 14.68. Considering the correction in the stock price in the past 12 months, demand for online education, decent financials, and associated risks, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 12.59, down by 0.32% as of June 09, 2021.
* The reference data in this report has been partly sourced from REFINITIV.
* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.
Mesa Air Group, Inc.
MESA Details
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