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Strategic Education (STRA)
:STRA
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Strategic Education
(NASDAQ:STRA)
72Outperform
Positive Factors
Financial Performance
Adjusted EBITDA and EPS were above expectations, indicating strong financial performance in those areas.
Investment Opportunity
The stock is trading at a discount to its postsecondary education peer group, offering a potential investment opportunity.
Price Target
There is a 12-month price target of $135, representing more than 40% upside.
Negative Factors
Price Target Adjustment
The price target has been scaled back to $120 due to slightly lower adjusted EBITDA expectations.
Revenue and Enrollment
Revenue and enrollment were below expectations, leading to a decrease in stock price by approximately 17%.
Valuation
The company is trading at a premium to its postsecondary education peer group, which is historically consistent.
Strategic Education (STRA) vs. S&P 500 (SPY)
Market Cap
$1.91B
Dividend Yield3%
Average Volume (3M)223.05K
Price to Earnings (P/E)16.6
Beta (1Y)0.94
Revenue Growth7.68%
EPS Growth61.28%
CountryUS
Employees3,801
SectorConsumer Defensive
Sector Strength96
IndustryEducation & Training Services
Share Statistics
EPS (TTM)4.67
Shares Outstanding24,654,184
10 Day Avg. Volume266,245
30 Day Avg. Volume223,046
Financial Highlights & Ratios
PEG Ratio0.27
Price to Book (P/B)N/A
Price to Sales (P/S)1.65
Price to Cash Flow (P/CF)31.70
P/FCF Ratio31.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$112.33Price Target Upside44.68% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Strategic Education Business Overview & Revenue Model
Company DescriptionStrategic Education, Inc. (STRA) is an education services holding company that focuses on providing flexible and accessible education and skills training programs. It operates through two primary segments: Strayer University and Capella University. Both universities offer a range of undergraduate and graduate degree programs, focusing on areas such as business, healthcare, and information technology. The company aims to enhance the student experience by integrating modern technology and personalized learning approaches.
How the Company Makes MoneyStrategic Education, Inc. generates revenue primarily through tuition and fees from its degree programs offered at Strayer University and Capella University. These universities provide online and campus-based education, catering to working adults seeking to further their education. The company also earns income from its non-degree programs, including courses and certifications that focus on career advancement and skills training. Additionally, Strategic Education benefits from partnerships with corporations and organizations, which may involve offering tailored educational programs to employees, thus expanding its reach and enrollment. Financial aid and government funding, in the form of grants and loans for students, also play a role in facilitating revenue generation by making education more accessible to a broader audience.
Strategic Education Financial Statement Overview
Summary
Strategic Education shows strong financial performance with consistent revenue growth, improved net profit margin, and a solid balance sheet with low leverage. Cash flow generation is robust despite some volatility, indicating a stable financial foundation.Income Statement
Strategic Education has demonstrated consistent revenue growth with a 7.68% increase from 2023 to 2024. The Gross Profit Margin remains strong, indicating efficient cost management. Net Profit Margin has improved to 9.24% in 2024, reflecting better profitability. However, the EBIT and EBITDA margins have displayed some fluctuations due to varying operational efficiencies.75
Positive
Balance Sheet
The company's balance sheet is robust, with a low Debt-to-Equity Ratio of 0.08, indicating low leverage and financial stability. The Return on Equity has improved to 6.77%, showcasing enhanced shareholder returns. The Equity Ratio remains high at 81.14%, signifying strong equity financing and low risk from debt.80
Positive
Cash Flow
Cash flow from operations has increased, demonstrating strong cash generation capability. The Free Cash Flow Growth Rate is impressive at 60.56% from 2023 to 2024. However, the Free Cash Flow to Net Income Ratio indicates some volatility, suggesting the need for careful cash management.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.22B | 1.13B | 1.07B | 1.13B | 1.03B |
| Gross Profit | ||||
| 569.43M | 509.02M | 468.16M | 523.42M | 494.99M |
| EBIT | ||||
| 155.63M | 95.32M | 70.76M | 147.26M | 161.69M |
| EBITDA | ||||
| 155.63M | 170.43M | 137.12M | 214.00M | 244.69M |
| Net Income Common Stockholders | ||||
| 112.68M | 69.79M | 46.67M | 55.09M | 86.27M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 184.02M | 208.21M | 222.82M | 275.42M | 195.07M |
| Total Assets | ||||
| 2.05B | 2.13B | 2.16B | 2.31B | 2.30B |
| Total Debt | ||||
| 125.23M | 213.32M | 259.28M | 331.46M | 282.78M |
| Net Debt | ||||
| -11.85M | 44.84M | 45.61M | 62.54M | 95.27M |
| Total Liabilities | ||||
| 387.24M | 472.69M | 525.96M | 591.89M | 547.49M |
| Stockholders Equity | ||||
| 1.66B | 1.65B | 1.64B | 1.71B | 1.75B |
| Cash Flow | Free Cash Flow | |||
| 128.75M | 80.18M | 82.88M | 131.09M | 96.09M |
| Operating Cash Flow | ||||
| 169.33M | 117.12M | 126.05M | 180.53M | 142.91M |
| Investing Cash Flow | ||||
| -64.36M | -48.55M | -31.36M | -33.09M | -642.19M |
| Financing Cash Flow | ||||
| -136.77M | -113.61M | -142.36M | -67.89M | 279.19M |
Strategic Education Technical Analysis
Negative
77.64
Price Trends
85.99
Negative
91.03
Negative
93.23
Negative
Market Momentum
-1.95
Negative
39.69
Neutral
57.03
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STRA, the sentiment is Negative. The current price of 77.64 is below the 20-day moving average (MA) of 81.27, below the 50-day MA of 85.99, and below the 200-day MA of 93.23, indicating a bearish trend. The MACD of -1.95 indicates Negative momentum. The RSI at 39.69 is Neutral, neither overbought nor oversold. The STOCH value of 57.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STRA.
Strategic Education Risk Analysis
Strategic Education disclosed 39 risk factors in its most recent earnings report. Strategic Education reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Strategic Education Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $5.92B | 22.72 | 22.95% | ― | 13.13% | 56.75% | |
72 Outperform | $1.91B | 16.63 | 6.80% | 3.00% | 7.68% | 61.28% | |
70 Outperform | $5.01B | 22.53 | 30.13% | ― | 7.50% | 13.70% | |
68 Neutral | $435.58M | 44.41 | 5.41% | ― | 4.00% | ― | |
68 Neutral | $2.85B | 9.86 | 30.98% | ― | 5.55% | 185.01% | |
63 Neutral | $9.29B | 14.78 | 4.06% | 187.31% | 3.96% | 6.50% | |
55 Neutral | $1.33B | 35.79 | -13.54% | ― | 6.09% | -191.19% |
* Consumer Defensive Sector Average
Performance Comparison
STRA
Strategic Education
77.64
-18.78
-19.48%
APEI
American Public Education
22.35
9.34
71.79%
LOPE
Grand Canyon Education
168.22
39.28
30.46%
LRN
Stride
133.01
74.91
128.93%
LAUR
Laureate Education
18.65
4.46
31.43%
KLC
KinderCare Learning Companies Inc
11.04
-17.00
-60.63%
Strategic Education Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -20.15% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
Strategic Education reported strong financial performance in 2024 with significant growth in revenue, operating income, and enrollment across various segments. However, challenges such as the fourth-quarter revenue decline in US higher education and regulatory uncertainties in Australia present potential obstacles. Overall, the company's achievements in expanding partnerships and technological services underpin a positive outlook.Highlights
Strong Financial Performance
For the full year 2024, Strategic Education's revenue increased 8%, operating income increased 26%, and adjusted earnings per share grew 31% to $4.87.
US Higher Education Segment Growth
Average total enrollment grew by 6% for the year, with employer-affiliated enrollment increasing by 16%. Operating income for US higher education grew by almost 30%.
Australia and New Zealand Segment Success
Enrollment increased by 5%, and revenue grew 11% on a constant currency basis, driven by higher student enrollment and a small tuition increase.
Record Year for Education Technology Services
The segment grew revenue by more than 30% to over $100 million, and operating income increased by almost 50%. Sophia Learning grew subscribers and revenue by 35%.
Expansion of Corporate Partnerships
Workforce Edge added 11 corporate partners, totaling 76 partners with 3.8 billion employees. A major partnership was launched with Best Buy, converting it into an all-inclusive program.
Lowlights
Fourth Quarter Revenue Decline
Revenue in the US higher education segment was down in the fourth quarter due to higher scholarships and a shift to employer-affiliated students.
Regulatory Uncertainty in Australia
The proposed international student cap was replaced by a new regulation affecting visa processing speed, creating uncertainty about future enrollment impacts.
Company Guidance
During Strategic Education's Fourth Quarter 2024 Results Conference Call, the company reported robust financial performance, with full year revenue growing by 8% and operating income increasing by 26%, which resulted in an operating margin expansion of nearly 200 basis points. Adjusted earnings per share rose by 31% to $4.87. The US higher education segment saw a 6% increase in average total enrollment, while employer-affiliated enrollment grew by 16%. In Australia and New Zealand, enrollment increased by 5%, with revenue up 11% on a constant currency basis. The education technology services segment achieved record revenue growth of over 30%, with Sophia Learning's subscribers and revenue up by 35%. Workforce Edge expanded its corporate partners to 76, employing over 3.8 billion employees, and launched its largest-ever employer partner. The company generated $217 million in pretax cash from operations and returned $75 million to owners through dividends and share repurchases, ending the year with nearly $200 million in cash and marketable securities.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.