Perdoceo Education Corp

Perdoceo Education Corp. announced on September 14 a definitive agreement to acquire South University, a Savannah, Georgia-based institution founded in 1899 that adds eleven campuses and online clinical programs in nursing, pharmacy, and physician assistant studies. The deal is funded entirely from cash on hand, backed by $734.8 million in cash and cash equivalents as of June 30, 2026, and includes $18 million in deferred consideration payable over 24 months plus up to $56 million in performance-based earn-outs tied to EBITDA thresholds across fiscal years 2027, 2028, and 2029. The transaction is expected to close as early as April 2027, with a drop-dead termination date of July 9, 2027, and management expects it to be immediately accretive to adjusted operating income. The announcement followed double-digit earnings growth and a 13.3% dividend hike to $0.17 per share, while the existing University of St. Augustine for Health Sciences segment posted second-quarter revenue growth of 10.2% and swung to $3.6 million in operating income from a $1.7 million loss a year earlier. Colorado Technical University, the largest revenue contributor at $115.5 million in the second quarter, saw operating income slip 5.1% on elevated legal expenses, and the American InterContinental University System segment recorded enrollment down 1.0% and revenue down 1.8%.

Perdoceo Education said Monday it has entered into a definitive agreement to acquire 100% of the membership interests of South University Savannah from South University – Member. The company expects to complete the acquisition as early as April 2027, after which South will operate as a for-profit institution. Perdoceo expects to pay approximately $130 million to $140 million in cash at closing, after adjustments for cash, net working capital, and certain debt-like items agreed upon, based on South's balance sheet as of the beginning of April 2027, as well as indebtedness and Seller transaction expenses outstanding at closing. The consideration also includes $18 million of deferred consideration in installments over 24 months following closing and up to $56 million of earn-out payments tied to specified EBITDA thresholds for fiscal years 2027, 2028, and 2029. Perdoceo said it remains on track to achieve its full-year adjusted operating income outlook of $258 million to $263 million.

Perdoceo Education Corp raised its full-year 2026 adjusted operating income guidance to a range of $258 million to $263 million and adjusted EPS to $3.10 to $3.16, representing a 19.9% increase at the midpoint, following second-quarter net income of $48 million, or $0.75 per diluted share, up from $41 million, or $0.62 per share, a year earlier. Year-to-date operating income grew 14.4% and revenue increased 3%, driven by disciplined expense management and investments in academics, technology, and student support. Total student enrollments grew 0.7% year-over-year, with CTU achieving its 11th consecutive quarter of enrollment growth and the University of St. Augustine for Health Sciences seeing a 6% increase in enrollments and a near doubling of adjusted operating income to $10.7 million. The Board approved a 13.3% increase in the quarterly dividend to $0.17 per share, and the company maintains a strong balance sheet with $734.8 million in cash and investments while actively evaluating accretive acquisition opportunities, particularly in health sciences.

Zacks Investment Research identifies three for-profit education stocks—American Public Education, Lincoln Educational Services, and Perdoceo Education—as managing through regulatory and cost pressures in 2026. The Zacks Schools industry faces heightened regulatory scrutiny, funding uncertainty, and rising expenses, yet benefits from persistent healthcare and skilled-trade worker shortages driving demand for career-focused programs. American Public Education, with a Zacks Rank #1 (Strong Buy), has seen its 2026 earnings estimate revised upward to $2.59 per share and its stock surge 68.7% over the past year. Lincoln Educational Services, ranked #3 (Hold), has soared 92.1% over the past year, though its 2026 earnings are expected to decline 15.2%. Perdoceo Education, also ranked #3, has gained 9.6% over the past year and expects 19.2% earnings growth in 2026. The industry trades at a forward price-to-earnings ratio of 11.33, well below the S&P 500's 21.02, and has collectively lost 5.6% over the past year while the S&P 500 rose 22.8%.

Perdoceo Education presents a stronger value opportunity than American Public Education, according to an analysis by Zacks Investment Research. Perdoceo holds a Zacks Rank of #2 (Buy) with an improving earnings outlook, while American Public Education is ranked #3 (Hold). Perdoceo's forward P/E ratio stands at 10.69 compared to 21.57 for American Public Education, and its PEG ratio is 0.71 versus 1.44. Additionally, Perdoceo's price-to-book ratio is 2.09, lower than American Public Education's 3.36. These metrics contribute to Perdoceo earning a Value grade of A, while American Public Education receives a C.