Perdoceo Education Surprises with Exceptional Q4 Results

Key Highlights:

* Revenue: $176.4 million, surpassing analyst estimates by 10.2% (19.3% YoY growth)
* Adjusted EPS: $0.50, exceeding consensus by 4.2%
* Adjusted EBITDA: $42.68 million, 5.3% above expectations (24.2% margin)
* Adjusted EPS guidance for FY2025: $2.41 midpoint, 2.1% above analyst estimates
* Operating Margin: 21.1% (up from 14.5% YoY)
* Free Cash Flow Margin: 10% (up from 7.8% YoY)
* Market Capitalization: $1.85 billion

Company Overview:

Perdoceo Education (PRDO), formerly Career Education Corporation, specializes in postsecondary education. The company provides alternative educational pathways such as online courses and flexible schedules to address rising education costs.

Sales Growth:

Perdoceo Education's long-term sales growth has been modest (1.7% annualized), falling below benchmarks. However, the company's Q4 revenue performance was impressive, with a 19.3% YoY increase.

Cash Flow:

Perdoceo Education exhibits strong cash profitability, averaging a 19% free cash flow margin over the past two years. Its Q4 free cash flow margin was 10%, an improvement over the previous year.

Key Takeaways:

* Perdoceo Education exceeded expectations in Q4 revenue and provided optimistic EPS guidance for FY2025.
* The company's solid financial performance indicates its resilience and growth potential.
* However, investors should carefully consider the company's valuation, business qualities, and long-term growth prospects before making investment decisions.

Additional Insights:

* The rise of alternative education paths suggests a growing market for Perdoceo Education's services.
* Enterprise software companies leveraging generative AI capabilities may offer attractive investment opportunities.
* Free cash flow remains a crucial metric for assessing a company's financial health and ability to reinvest or return capital to shareholders.