Perdoceo Education Corporation (PRDO) Hits Fresh High: Is There Still Room to Run?
Shares of Perdoceo Education (PRDO) have been strong performers lately, with the stock up 9.2% over the past month. The stock hit a new 52-week high of $17.49 in the previous session. Perdoceo Education has gained 25.1% since the start of the year compared to the 11.6% move for the Zacks Consumer Discretionary sector and the 20.4% return for the Zacks Schools industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 3, 2023, Perdoceo Education reported EPS of $0.61 versus consensus estimate of $0.52 while it beat the consensus revenue estimate by 3.98%.
For the current fiscal year, Perdoceo Education is expected to post earnings of $1.88 per share on $702.81 million in revenues. This represents a 15.34% change in EPS on a 1.09% change in revenues. For the next fiscal year, the company is expected to earn $2 per share on $727.41 million in revenues. This represents a year-over-year change of 6.38% and 3.5%, respectively.
Valuation Metrics
Perdoceo Education may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Perdoceo Education has a Value Score of A. The stock's Growth and Momentum Scores are D and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 9.3X current fiscal year EPS estimates, which is not in-line with the peer industry average of 20X. On a trailing cash flow basis, the stock currently trades at 8.8X versus its peer group's average of 8.8X. Additionally, the stock has a PEG ratio of 0.62. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Perdoceo Education currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Perdoceo Education meets the list of requirements. Thus, it seems as though Perdoceo Education shares could have a bit more room to run in the near term.
How Does PRDO Stack Up to the Competition?
Shares of PRDO have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Lincoln Educational Services Corporation (LINC). LINC has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. Lincoln Educational Services Corporation beat our consensus estimate by 200%, and for the current fiscal year, LINC is expected to post earnings of $0.35 per share on revenue of $365.56 million.
Shares of Lincoln Educational Services Corporation have gained 20.6% over the past month, and currently trade at a forward P/E of 24.8X and a P/CF of 10.82X.
The Schools industry is in the top 13% of all the industries we have in our universe, so it looks like there are some nice tailwinds for PRDO and LINC, even beyond their own solid fundamental situation.
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Perdoceo Education Corporation (PRDO) : Free Stock Analysis Report
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