Strategic Education (STRA) AI Stock Analysis

• Market Cap: $1.97B
• Dividend Yield: 2.99%
• Average Volume (3M): 187.79K
• Price to Earnings (P/E): 17.5
• Beta (1Y): 0.91
• Revenue Growth: 3.74%
• EPS Growth: -8.40%
• Country: US
• Employees: 3,801
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Education & Training Services
• EPS (TTM): 1.63
• Shares Outstanding: 23,486,618
• 10 Day Avg. Volume: 252,332
• 30 Day Avg. Volume: 187,793
• PEG Ratio: 0.32
• Price to Book (P/B): 1.32
• Price to Sales (P/S): 1.79
• P/FCF Ratio: 16.98
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: 1.54
• Enterprise Value/Gross Profit: 3.21
• Enterprise Value/Ebitda: 9.03
• 1Y Price Target: $95.00
• Price Target Upside: 13.20% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 6.43
• Revenue Forecast (FY): $1.32B

• Rating: 77 Outperform
• Price Target: $96.00 ▲(14.39% Upside)

The score is driven primarily by strong financial performance (solid growth, profitability, and very low leverage) and supportive technicals (trading above major moving averages with positive momentum). Earnings call factors further strengthen the outlook via ETS-led margin and earnings expansion, while reasonable valuation and risks from gross margin pressure and Australia/New Zealand regulatory headwinds temper the score.

Positive Factors

Conservative Balance Sheet

Very low leverage provides durable financial flexibility to fund investments, weather enrollment/regulatory shocks, and support capital returns. A conservative capital structure reduces refinancing risk and preserves optionality for strategic M&A or continued buybacks over the next several quarters.

High-Growth ETS Segment

Rapid ETS growth materially diversifies revenue and profit mix toward higher-growth, scalable digital services. The segment's strong margin contribution and subscription momentum support sustainable operating income expansion and reduce dependence on cyclical campus enrollments over the medium term.

Consistent Revenue and Profitability

Sustained revenue growth and healthy operating margins indicate a resilient, career-focused education model with steady cash generation. This foundational profitability supports reinvestment in programs, workforce partnerships, and steady capital returns, underpinning medium-term operational stability.

Negative Factors

Declining Gross Margin

Eroding gross margins point to rising costs or pricing pressure that can compress operating leverage and reduce free cash flow. If the trend persists, margin deterioration will limit reinvestment capacity and pressure net income and cash available for buybacks or strategic initiatives over coming quarters.

Australia & New Zealand Regulatory Headwinds

Regulatory constraints in ANZ directly reduce enrollment and revenue in that region and introduce structural uncertainty. Prolonged restrictions can force reallocation of resources, depress geographic diversification benefits, and require strategic adjustments to offset persistent revenue shortfalls.

Mixed Cash Flow Efficiency

Lower cash conversion of earnings limits near-term funding flexibility despite rising free cash flow. Continued mixed efficiency constrains the scale of discretionary uses—M&A, buybacks, or program investment—and makes the company more sensitive to margin or enrollment fluctuations in the medium term.

Strategic Education Business Overview & Revenue Model

Company Description

Strategic Education, Inc., through its subsidiaries, provides education services through campus-based and online post-secondary education, and programs to develop job-ready skills. It operates through three segments: U.S. Higher Education, Australia/New Zealand, and Education Technology Services. The company operates Strayer University that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, public administration, and criminal justice at physical campuses located in the eastern United States, as well as through online; non-degree web and mobile application development courses through Hackbright Academy and Devmountain; and an executive MBA online through its Jack Welch Management Institute. It also operates Capella University, an online post-secondary education institution that provides various bachelor's, master's, and doctoral degree programs to working adults in arts and sciences, business and technology, counseling and human services, education, nursing and health sciences, psychology, and public service leadership. The company operates Torrens University, which offers undergraduate, graduate, higher degree by research, and specialized degree courses primarily in business, design and creative technology, health, hospitality, and education fields through online and on physical campuses located in Australia; Think Education, a vocational training organization; and Media Design School, which provides industry-endorsed courses in 3D animation and visual effects, game art and programming, graphic and motion design, digital media artificial intelligence, and creative advertising in New Zealand. It also offers Workforce Edge, a platform to employers that provides education benefits administration solutions; and Sophia Learning, which enables lower cost education benefits programs. The company was founded in 1892 and is headquartered in Herndon, Virginia.

How the Company Makes Money

Strategic Education generates revenue primarily through tuition and fees paid by students enrolled in its various degree programs. The company's revenue model is bolstered by its extensive online learning platform, allowing for a broad reach to students across different demographics. Key revenue streams include direct tuition from students, government financial aid programs, and partnerships with employers for workforce development initiatives. Additionally, STRA benefits from its collaborations with educational institutions and organizations that enhance its program offerings and expand its market presence, contributing significantly to its overall earnings.

Strategic Education Financial Statement Overview

Summary

Strategic Education demonstrates strong financial health with consistent revenue growth and profitability. The balance sheet is solid with low leverage, and cash flows are improving, although there is potential for better cash conversion.

Income Statement

Strategic Education shows a solid revenue growth trajectory with a TTM revenue growth rate of 1.13%. The company maintains a healthy net profit margin of 9.08% in the TTM, indicating strong profitability. However, the gross profit margin has significantly decreased to 11.51% in the TTM, which could indicate rising costs or pricing pressures. The EBIT and EBITDA margins are stable, reflecting efficient operational management.

Balance Sheet

The company has a strong balance sheet with a low debt-to-equity ratio of 0.07 in the TTM, suggesting low financial leverage and risk. Return on equity is moderate at 6.88%, indicating decent profitability relative to shareholder equity. The equity ratio is robust, reflecting a strong capital structure with a significant portion of assets financed by equity.

Cash Flow

Cash flow analysis reveals a positive free cash flow growth rate of 5.79% in the TTM, indicating improved cash generation. The operating cash flow to net income ratio is 0.62, suggesting that operating cash flows are adequately covering net income. However, the free cash flow to net income ratio of 0.75 indicates some room for improvement in converting income into cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.26B	1.22B	1.13B	1.07B	1.13B	1.03B
Gross Profit	602.42M	569.43M	509.02M	468.16M	523.42M	494.99M
EBITDA	213.95M	201.65M	170.43M	137.12M	214.00M	244.69M
Net Income	114.04M	112.68M	69.79M	46.67M	55.09M	86.27M
Balance Sheet
Total Assets	2.11B	2.05B	2.13B	2.16B	2.31B	2.30B
Cash, Cash Equivalents and Short-Term Investments	181.20M	184.02M	208.21M	222.82M	275.42M	195.07M
Total Debt	117.65M	125.23M	213.32M	259.28M	331.46M	282.78M
Total Liabilities	455.86M	387.24M	472.69M	525.96M	591.89M	547.49M
Stockholders Equity	1.66B	1.66B	1.65B	1.64B	1.71B	1.75B
Cash Flow
Free Cash Flow	131.66M	128.75M	80.18M	82.88M	131.09M	96.09M
Operating Cash Flow	174.91M	169.33M	117.12M	126.05M	180.53M	142.91M
Investing Cash Flow	-49.73M	-64.36M	-48.55M	-31.36M	-33.09M	-642.19M
Financing Cash Flow	-170.14M	-136.77M	-113.61M	-142.36M	-67.89M	279.19M

Strategic Education Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 83.92
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STRA, the sentiment is Positive. The current price of 83.92 is above the 20-day moving average (MA) of 82.26, above the 50-day MA of 79.88, and above the 200-day MA of 80.86, indicating a bullish trend. The MACD of 1.18 indicates Negative momentum. The RSI at 57.11 is Neutral, neither overbought nor oversold. The STOCH value of 70.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for STRA.

Strategic Education Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
STRA	77 Outperform	$1.97B	17.46	6.76%	2.99%	3.74%	-8.40%
PRDO	76 Outperform	$2.03B	13.49	16.14%	1.88%	24.23%	17.56%
APEI	68 Neutral	$726.84M	30.68	11.20%	―	6.75%	141.11%
UTI	63 Neutral	$1.50B	24.23	21.42%	―	14.05%	51.96%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
LINC	58 Neutral	$824.75M	57.57	7.94%	―	16.90%	41.11%
KLC	51 Neutral	$514.69M	―	-11.88%	―	2.20%	-229.99%