Summary
- Confluence of events will lead to sharply higher earnings and share price.
- Management has consistently downplayed future estimates and is now revising expectations upward every quarter.
- The stock traded down for no reason at all, and is now rebounding, creating an excellent buy opportunity.
This week, Career Education Corporation changed their name to Perdoceo Education Corporation (NASDAQ: PRDO). This is the culmination of a 5 year long transformation of the business, first announced in May 2015.
The business first went public around 2000, and the share price rapidly went from about $2 per share to about $70 through a series of bolt-on, brick-and-mortar style, physical campus acquisitions.
This page from the company’s 2005 annual report shows the extent of their, then successful, growth strategy.
The company had approximately 70 campuses spread across the globe.
A few things of note. While successful at that time, the business model carried heavy fixed costs in the form of physical campus infrastructure, and an inefficient human capital requirement necessary to run a dispersed network. Also notable, the company did have a small but growing “Online Education” division (see end of list).