There is a rising demand for customized outsourcing solutions that cater to the unique needs of educational institutions. This trend is driven by the shift towards personalized education, prompting institutions to seek specialized services that align with their specific requirements.
The rising acceptance of digital learning and the global push towards building digital literacy skills from a young age also significantly contribute to the EdTech market’s growth. The global EdTech market is expected to grow at a CAGR of 13.9% by 2033.
Against this backdrop, let’s compare two established for-profit educator stocks to analyze which stock deserves investment: Perdoceo Education Corporation (PRDO) and Grand Canyon Education, Inc. (LOPE).
The Case for Perdoceo Education Corporation Stock
Valued at $1.79 billion by market cap, Perdoceo Education Corporation (PRDO) provides postsecondary education through online, campus-based, and blended learning programs in the United States. It operates in two segments: Colorado Technical University and The American InterContinental University System.
PRDO has gained 12.8% over the past nine months to close the last trading session at $27.17.
In terms of the trailing-12-month gross profit margin, PRDO’s 83.53% is 124.1% higher than the 37.27% industry average. Likewise, its 18.45% trailing-12-month levered FCF margin is 304.1% higher than the industry average of 4.57%.
In the fiscal quarter that ended on December 31, 2024, PRDO’s revenue increased 133.2% year-over-year and amounted to $37.18 million. The company reported an adjusted operating income of $43.23 million, while its EPS grew 80.8% from the prior-year quarter to $0.47.
Street expects PRDO’s revenue for the fiscal first quarter (ending March 2025) to increase 23.6% year-over-year to $207.97 million. Its EPS for the same period is expected to grow 10% year-over-year to $0.66. In addition, it surpassed the revenue and EPS estimates in each of the trailing four quarters, which is promising.
PRDO’s POWR Ratings reflect solid prospects. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PRDO is ranked #2 out of 19 stocks in the Outsourcing - Education Services industry. It has an A grade for Quality and a B for Growth and Momentum. To see PRDO’s Value, Sentiment, and Stability ratings, click here.
The Case for Grand Canyon Education, Inc. stock
Valued at $5.30 billion by market cap, Grand Canyon Education, Inc. (LOPE) provides education services to colleges and universities in the United States. It offers technology services, including a learning management system, internal administration, infrastructure and support services, field experience, and other counseling services.
LOPE has gained 25.9% over the past nine months to close the last trading session at $187.27.
In terms of the trailing-12-month gross profit margin, LOPE’s 52.66% is 41.3% higher than the 37.27% industry average. However, its 270.53 million trailing-12-month cash per share is 8.3% lower than the industry average of 294.97 million.
LOPE’s service revenue for the fourth quarter that ended December 31, 2024, was reported at $292.57 million. The company’s net income and earnings per share came in at $81.88 million and $2.84, respectively.
LOPE’s mixed fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to a Neutral in our proprietary rating system.
LOPE has a C grade in Stability and Growth. It is ranked #13 in the same industry.
Click here for the additional POWR Ratings for LOPE (Value, Momentum, Sentiment, and Quality).
Perdoceo Education vs. Grand Canyon Education: Which For-Profit Educator Deserves Your Investment?
Emerging markets are increasingly leveraging outsourced educational services to enhance access and quality. Countries investing in education and EdTech are turning to outsourcing as a strategic approach to meet the growing demand for quality education.
Leading for-profit education companies, such as PRDO and LOPE, stand to capitalize on the optimistic industry outlook. However, PRDO’s higher profitability and promising near-term outlook favor it as the better stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Outsourcing - Education Services industry here.
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LOPE shares were trading at $182.83 per share on Friday afternoon, down $4.44 (-2.37%). Year-to-date, LOPE has gained 11.62%, versus a 2.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
Perdoceo Education vs. Grand Canyon Education: Which for-Profit Educator Deserves Your Investment? StockNews.com
