How Perdoceo Education (PRDO) Stock Quietly Beat the Market

Knowledge is power — and money? Today, we’d like to introduce you to a little-known company that’s quietly killing it: Perdoceo Education (NASDAQ: PRDO). This small-cap company runs four for-profit universities and has quietly been outperforming expectations and accruing a hefty nest egg for further growth.

PRDO receives a Zen Rating of A or Strong Buy. Our rigorous quant system takes into account 115 factors — stocks with this rating are the cream of the crop and have historically provided an average annual return of 32.52%.

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In 2024, PRDO stock outperformed those admittedly high expectations, and by a significant margin, rallying by an impressive 56.27% for the year. Over the last thirty days, the price of the stock has dipped by 2.67% — and at the time of writing, it was changing hands at $27.52.

Here’s why the recent dip could be an opportunity for investors. 

As impressive as that rally was, we have good reason to believe that the education business can replicate, if not outdo its prior successes. For one, Perdoceo stock remains quite undervalued.

An attractive valuation (usually) isn’t enough to bring about outperformance — but PRDO also boasts an incredibly healthy balance sheet. Perdoceo Education is the top-rated stock we track in the entire education industry.

Let’s take a closer look at the exact factors that have made the stock rank so highly.

In terms of Component Grades, PRDO is solid across the board, with above-average grades in most areas. The stock’s Value rating and Financial rating, which are rated A, are both in the 99th percentile. In addition, even though it carries a B rating, Perdoceo Education’s Safety rating is in the 90th percentile of all the stocks we track.

First, let’s deal with that attractive valuation. At present, PRDO stock is trading at a price-to-earnings (P/E) ratio of just 13.4x. 

For reference, the wider market average is 29.91x, while the education industry’s average of 26.88x is twice as high as Perdoceo’s. In addition, the stock also scores highly once we look at valuation relative to growth, as it boasts a price-to-earnings growth (PEG) ratio of 0.89x.

With that out of the way, now it’s time for Financials. PRDO’s profit margins stand at 20.4% — a 0.6% improvement from last year. The business has $141.17 million in short-term liabilities and an additional $40.16 million in long-term liabilities. Put together, that’s $181.33 million — a figure easily overshadowed by the $773.52 million that it holds in short-term assets.

The company has also managed to successfully deleverage in the last five years, bringing its debt-to-equity (D/E) ratio down from an already acceptable 0.49 to just 0.19.

This undervalued education company held its last earnings call on November 12 — an occasion that marked its 7th consecutive quarter of beating earnings estimates, and its 8th when it comes to beating analyst revenue forecasts. 

It will release its next earnings call on February 19. If things keep going the way they are, it’s only a matter of time before the markets realize what they have on their hands.

—> Click here to research PRDO

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