Perdoceo Education Corp. (PRDO) — a for-profit post-secondary higher education provider — released its second-quarter result in early August, notes growth stock expert Taesik Yoon, editor of Dividend Investor.

Specifically, with the impact from the COVID-19 pandemic continuing to remain fairly benign, revenue increased 12.5% year-over-year to $176.0 million as a 45.3% jump in new student enrollments led to a 20.1% rise in total enrollments. 

This growth was driven in large part by a significantly greater number of enrollment days and the acquisition of Trident University International, which contributed to a 118.8% and 52.7% surge in new and total enrollments at PRDO’s AIU university. 

However, the company’s CTU university also enjoyed solid growth with new and total enrollments up 4.5% and 4.0%.  Further bolstered by better margins, adjusted earnings climbed by a higher 20.6% to 40 cents per share and beat the consensus estimate by 3 cents.

We believe the company’s persistently strong operating performance in the midst of a major health crisis continues to highlight the advantages of its scalable and innovative technology infrastructure, which enabled PRDO to quickly transition campus-based students to its online learning platforms.

Perdoceo Education was able to provide the tools and resources required by its employees to continue effectively and efficiently serving students while working remotely.

It doesn’t hurt that the stay-at-home mandates designed to curb the spread of the virus in the U.S. probably led to an uptick in demand for online-based higher education.

Perhaps this is why the strong post-earnings bounce its stock initially enjoyed didn’t last.  After all, such a boost could prove temporary. 

No doubt that some likely took the lowering of its full-year adjusted earnings guidance by a penny to $1.48-1.52 per share — even as the company came in 2 cents ahead of the top end of its 36-38 cents per share guided range for Q2 — as evidence of this. 

But the fact is, PRDO was seeing improving enrollment levels and strong earnings growth even before the pandemic hit for the reasons we outlined in our initial recommendation last September. 

Thus, even if its current enrollment levels are a bit inflated and could temporarily reverse, we believe the trend over the longer term will remain favorable. 

That, along with the company’s exceedingly healthy and improving balance sheet, which includes net cash and short-term investment balance that has now ballooned to $345.8 million (or nearly $5 per share) and has zero debt, makes PRDO’s stock worthy of a much higher value in our view.