Critical Analysis: Perdoceo Education (NASDAQ:PRDO) versus Chegg (NASDAQ:CHGG)

Perdoceo Education (NASDAQ:PRDO) and Chegg (NYSE:CHGG) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Analyst Recommendations

This is a breakdown of current ratings for Perdoceo Education and Chegg, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Perdoceo Education 0 0 0 0 N/A
Chegg 0 1 11 0 2.92

Chegg has a consensus target price of $45.59, indicating a potential upside of 5.22%. Given Chegg’s higher probable upside, analysts clearly believe Chegg is more favorable than Perdoceo Education.

Risk and Volatility

Perdoceo Education has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500. Comparatively, Chegg has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Insider & Institutional Ownership

86.6% of Perdoceo Education shares are held by institutional investors. 5.6% of Perdoceo Education shares are held by insiders. Comparatively, 5.8% of Chegg shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Perdoceo Education and Chegg’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Perdoceo Education $581.30 million 2.28 $55.18 million $1.05 17.93
Chegg $321.08 million 16.33 -$14.89 million $0.09 481.44

Perdoceo Education has higher revenue and earnings than Chegg. Perdoceo Education is trading at a lower price-to-earnings ratio than Chegg, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Perdoceo Education and Chegg’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Perdoceo Education 9.20% 26.01% 18.18%
Chegg -3.27% 9.53% 3.40%

Summary

Perdoceo Education beats Chegg on 8 of the 13 factors compared between the two stocks.

About Perdoceo Education

Perdoceo Education Corporation operates colleges, institutions, and universities that provide education to student population in various career-oriented disciplines through online, campus based, and blended learning programs in the United States. It operates through three segments: Colorado Technical University, American InterContinental University, and All Other Campuses. The company offers doctoral, master's, bachelor's, and associate degrees, as well as certificate programs. It also provides academic programs in the career-oriented disciplines of business studies, nursing, computer science, engineering, information systems and technologies, cybersecurity, criminal justice, and healthcare management; and educational programs in culinary arts, as well as patisserie and baking. As of December 31, 2018, the company had a total student enrollment of approximately 34,400 students. The company was formerly known as Career Education Corporation and changed its name to Perdoceo Education Corporation in January 2020. Perdoceo Education Corporation was founded in 1994 and is headquartered in Schaumburg, Illinois.

About Chegg

Chegg, Inc. operates direct-to-student learning platform that supports students on their journey from high school to college and into their career with tools designed to help them pass their test, pass their class, and save money on required materials. The company offers Chegg Services, which include digital products and services; and required materials that comprise its print textbooks and eTextbooks. Its digital products and services include Chegg Study, which helps students master challenging concepts on their own; Chegg Writing that enables automatically generate sources in the required formats, when students need to cite their sources in written work; Chegg Tutors that allow students find human help on its learning platform through a network of live tutors; and Chegg Math solver, which helps students to get math help through self-guided and individualized math solutions The company also offers Other Services, such as Test Prep, internships, college admission and scholarship services; rents and sells print textbooks and eTextbooks; and offers supplemental materials and textbook buyback services. Chegg, Inc. was founded in 2003 and is headquartered in Santa Clara, California.

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