Perdoceo Education (PRDO) had another great quarterly showing. Indeed, driven by contributions from its recent acquisitions of Coding Dojo and California Southern University and the further improvement in student retention and engagement that’s been supported by various operating changes and technology upgrades within PRDO’s onboarding, academic and student support processes, Q3 revenue rose 6.8% from the prior year to $179.9 million, which easily beat the $167.6 million analyst forecast. And with PRDO also continuing to do an excellent job enhancing operating efficiencies in admissions and marketing, and earning a lot more interest income on its hefty and growing cash balance, adjusted earnings jumped 64.1% to 64 cents per share, which was 15 cents better than expected.
This solid operating performance also drove the production of $31.4 million in free cash flow during the quarter, which allowed PRDO to pay out $7.2 million for its newly declared dividend and still increase its already massive cash hoard by another $25.6 million to $603.7 million. The latter now translates into an unbelievable $9.00 in net cash per share and still represents more than half of its current share price even after its substantial climb of more than 25% over the past three months. And if its outlook for adjusted earnings of 21-24 cents per share in Q4—which is ahead of the 20-cent consensus estimate—is any guide, its profit and cash flow performance should continue to impress. As this continues to play out, I think the breather the stock took from its recent runup today will be a quick one and that it will be back on the rise in short order.
Julius Juenemann, CFA is the equity analyst and associate editor of the Forbes Special Situation Survey and Forbes Investor investment newsletters. Perdoceo Education (PRDO) is a current recommendation in the Forbes Investor. To access this and the other stocks being recommended through the Forbes Investor, click here to subscribe.
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