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Strategic Education Inc (STRA)
NASDAQ:STRA
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Strategic Education
(NASDAQ:STRA)
Rating:73Outperform
Price Target:―
Positive Factors
Dividends
A secure common dividend yielding 3.0% at current levels adds to the attractiveness of the stock.
Earnings
Revenue and earnings were above expectations, leading to an OUTPERFORM rating.
Valuation
The stock is trading at a discount to its postsecondary education peer group, offering a potential investment opportunity.
Negative Factors
Enrollment
Total enrollment was below the consensus estimate, impacting the overall sentiment.
Price Target
The price target has been scaled back to $105 from $120, reflecting adjustments in expectations.
Revenue and Enrollment
Revenue and enrollment were below expectations, leading to a decrease in stock price by approximately 17%.
Strategic Education (STRA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.12B
Dividend Yield2.74%
Average Volume (3M)223.64K
Price to Earnings (P/E)18.8
Beta (1Y)0.88
Revenue Growth5.72%
EPS Growth11.02%
CountryUS
Employees3,801
SectorConsumer Defensive
Sector Strength73
IndustryEducation & Training Services
Share Statistics
EPS (TTM)1.30
Shares Outstanding24,163,239
10 Day Avg. Volume175,634
30 Day Avg. Volume223,638
Financial Highlights & Ratios
PEG Ratio85.66
Price to Book (P/B)1.22
Price to Sales (P/S)0.00
P/FCF Ratio17.68
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$102.67Price Target Upside17.24% 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 demonstrates solid financial health with consistent revenue growth and strong cash flow management. The company's low leverage and high equity ratio indicate a stable financial structure. While profitability metrics like ROE can be improved, the overall financial position is resilient, supporting future growth prospects.Income Statement
Strategic Education has shown a steady increase in revenue over the years, with a TTM revenue growth rate of 1.09%. The gross profit margin improved significantly in the TTM period at 60.05% compared to the previous annual margin of 46.68%. The net profit margin is consistent, maintaining around 9.14% TTM. While EBIT and EBITDA margins are stable, there is room for improvement in operational efficiency.75
Positive
Balance Sheet
The company maintains a strong equity base, with an equity ratio of 79.23% TTM, indicating financial stability. The debt-to-equity ratio is low at 0.07 TTM, signifying prudent leverage management. However, the return on equity has potential for enhancement at 6.86% TTM, suggesting moderate profitability relative to equity.70
Positive
Cash Flow
Operating cash flow remains healthy with a stable ratio of 1.41 TTM to net income. Free cash flow growth shows a slight decline of 8.64% TTM, yet the company maintains robust cash flow generation relative to net income, suggesting efficient cash management practices.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.23B | 1.22B | 1.13B | 1.07B | 1.13B | 1.03B | Gross Profit |
| 582.20M | 569.43M | 509.02M | 468.16M | 523.42M | 494.99M | EBIT |
| 156.06M | 155.63M | 95.32M | 70.76M | 147.26M | 161.69M | EBITDA |
| 208.24M | 155.63M | 170.43M | 137.12M | 214.00M | 244.69M | Net Income Common Stockholders |
| 112.73M | 112.68M | 69.79M | 46.67M | 55.09M | 86.27M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 182.64M | 184.02M | 208.21M | 222.82M | 275.42M | 195.07M | Total Assets |
| 2.07B | 2.05B | 2.13B | 2.16B | 2.31B | 2.30B | Total Debt |
| 119.48M | 125.23M | 213.32M | 259.28M | 331.46M | 282.78M | Net Debt |
| -24.73M | -11.85M | 44.84M | 45.61M | 62.54M | 95.27M | Total Liabilities |
| 430.90M | 387.24M | 472.69M | 525.96M | 591.89M | 547.49M | Stockholders Equity |
| 1.64B | 1.66B | 1.65B | 1.64B | 1.71B | 1.75B |
| Cash Flow | Free Cash Flow | ||||
| 117.65M | 128.75M | 80.18M | 82.88M | 131.09M | 96.09M | Operating Cash Flow |
| 159.36M | 169.33M | 117.12M | 126.05M | 180.53M | 142.91M | Investing Cash Flow |
| -65.06M | -64.36M | -48.55M | -31.36M | -33.09M | -642.19M | Financing Cash Flow |
| -174.45M | -136.77M | -113.61M | -142.36M | -67.89M | 279.19M |
Strategic Education Technical Analysis
Neutral
87.57
Price Trends
82.85
Positive
87.76
Negative
89.82
Negative
Market Momentum
1.71
Positive
56.78
Neutral
14.34
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STRA, the sentiment is Neutral. The current price of 87.57 is above the 20-day moving average (MA) of 86.41, above the 50-day MA of 82.85, and below the 200-day MA of 89.82, indicating a neutral trend. The MACD of 1.71 indicates Positive momentum. The RSI at 56.78 is Neutral, neither overbought nor oversold. The STOCH value of 14.34 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $5.49B | 24.30 | 29.85% | ― | 6.31% | 11.24% | |
81 Outperform | $6.85B | 24.34 | 23.76% | ― | 14.90% | 60.56% | |
74 Outperform | $3.24B | 11.60 | 31.14% | ― | 1.26% | 140.30% | |
73 Outperform | $2.12B | 18.75 | 6.86% | 2.74% | 5.72% | 11.02% | |
69 Neutral | $528.74M | 29.10 | 8.18% | ― | 4.86% | ― | |
64 Neutral | $8.82B | 14.56 | 4.78% | 173.92% | 3.50% | 2.20% | |
61 Neutral | $1.40B | 35.79 | -13.54% | ― | 4.87% | -198.67% |
* Consumer Defensive Sector Average
Performance Comparison
STRA
Strategic Education
87.48
-24.31
-21.75%
APEI
American Public Education
29.31
11.68
66.25%
LOPE
Grand Canyon Education
194.17
48.71
33.49%
LRN
Stride
153.00
82.09
115.77%
LAUR
Laureate Education
21.84
5.82
36.33%
KLC
KinderCare Learning Companies Inc
11.73
-16.31
-58.17%
Strategic Education Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: 10.01%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The earnings call reflected positive financial growth and strategic advancements in corporate partnerships and education technology services. However, challenges persist in international markets, particularly in Australia and New Zealand, and the US higher education enrollment growth has slowed. Despite these challenges, the strong performance in ETS and strategic partnerships provide a positive outlook.Q1-2025 Updates
Positive Updates
Revenue and Earnings Growth
SEI's revenue grew by 5% in the first quarter, and adjusted operating income increased 16%. Operating margin increased to 13.6%, while adjusted earnings per share grew 16% to $1.29, compared to $1.11 for the same period in Q1 2024.
Education Technology Services Performance
The education technology services segment saw strong performance with revenue growing by 45% and operating income increasing 37%. Sofia Learning subscriptions and new Workforce Edge employer partnerships drove this growth.
US Higher Education Enrollment
Total enrollment in U.S. higher education slightly increased, with strong employer-affiliated enrollment rising 7% from the previous year. Corporate partnership enrollment now constitutes 31% of total US higher education enrollment, an increase of 200 basis points from the prior year.
Notable Corporate Partnerships
Workforce Edge added two additional corporate partners, bringing the total to 78, employing about 3.9 million employees. The partnership with Best Buy expanded, allowing employees to earn degrees at no cost.
Capital Allocation Strategy
The company repurchased approximately 390,000 shares for $32 million, with $197 million remaining in share repurchase authorization.
Negative Updates
Challenges in Australia and New Zealand
ANZ total enrollment decreased 1% due to lower international enrollment related to regulatory changes. ANZ reported an operating loss of $2.2 million in the first quarter.
Operating Margin Decline in ETS
ETS' operating margin was 40.3%, a decline of 240 basis points due to increased marketing and staffing investments.
US Higher Education Enrollment Stability
US higher education revenue grew by only 1%, and enrollment growth was relatively flat, indicating slowing growth compared to previous trends.
Company Guidance
During the first quarter of 2025, Strategic Education reported a 5% revenue increase and a 16% rise in adjusted operating income, with an operating margin of 13.6%. Adjusted earnings per share grew by 16% to $1.29. U.S. higher education enrollment saw a slight increase, with employer-affiliated enrollment rising 7%, contributing to a 1% growth in U.S. higher education revenue and a 7% increase in operating income. The corporate partnership enrollment percentage increased to 31%, up 200 basis points from the previous year. In Australia and New Zealand, total enrollment decreased by 1% due to regulatory changes affecting international students, although domestic enrollment showed growth. ANZ revenue increased by 6% on a constant currency basis, despite reporting a $2.2 million operating loss. The education technology services segment experienced strong performance, with a 45% revenue increase and a 37% rise in operating income, although the operating margin declined by 240 basis points to 40.3%. Sofia Learning saw a 37% increase in average total subscribers, while Workforce Edge expanded its partnerships, reaching 78 corporate partners. Strategic Education repurchased approximately 390,000 shares for $32 million, leaving $197 million in share repurchase authorization for the year.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.