Strategic Education (STRA) AI Stock Analysis

• Market Cap: $1.98B
• Dividend Yield: 2.93%
• Average Volume (3M): 170.66K
• Price to Earnings (P/E): 17.3
• Beta (1Y): 0.91
• Revenue Growth: 4.31%
• EPS Growth: -1.08%
• Country: US
• Employees: 3,801
• Sector: Consumer Defensive
• Sector Strength: 45
• Industry: Education & Training Services
• EPS (TTM): 1.52
• Shares Outstanding: 23,900,408
• 10 Day Avg. Volume: 143,525
• 30 Day Avg. Volume: 170,656
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: 1.57
• Enterprise Value/Gross Profit: 3.31
• Enterprise Value/Ebitda: 9.27
• 1Y Price Target: $95.67
• Price Target Upside: 16.73% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 78 Outperform
• Price Target: $94.00 ▲(14.69% Upside)

Strategic Education's overall stock score is driven by its strong financial performance and positive earnings call, highlighting growth in key segments and effective capital allocation. While technical indicators show mixed signals, the valuation remains reasonable, providing a balanced investment opportunity. Challenges in certain segments are noted but do not overshadow the company's overall positive outlook.

Positive Factors

Dividend

Strategic Education offers a secure dividend yield of 3.1%, which adds to its attractiveness as an investment.

Earnings

Strategic Education's second quarter revenue and earnings exceeded expectations, driven by strong performance in the Education Technology Services segment.

Valuation

The company's stock is trading at a discount compared to its peer group, suggesting potential for upside in its valuation.

Negative Factors

Enrollment

Total enrollment was below the consensus estimate, impacting the overall sentiment.

Regulatory Impact

Australia/New Zealand growth has slowed due to regulatory changes impacting international students.

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 from students enrolled in its online degree programs. The company has a diverse revenue model that includes direct payments from students as well as federal financial aid, which is a significant source of funding for many of its enrolled students. Additionally, Strategic Education benefits from partnerships with employers and organizations that provide tuition reimbursement programs, further enhancing its revenue streams. The company also explores opportunities in workforce development and corporate training, which contribute to its earnings by offering tailored educational solutions to businesses seeking to enhance employee skills and competencies.

Strategic Education Financial Statement Overview

Summary

Strategic Education exhibits a strong financial position with consistent revenue growth, solid profitability margins, and a robust balance sheet characterized by low leverage and high equity ratios. The company's cash flow is healthy, although there is room for optimization in free cash flow management. Overall, Strategic Education is well-positioned within the Education & Training Services industry, with a stable financial outlook and potential for future growth.

Income Statement

Strategic Education has shown consistent revenue growth, with a notable TTM revenue of $1.24 billion, reflecting a steady upward trajectory. The gross profit margin for TTM is approximately 23.16%, indicating efficient cost management. The net profit margin stands at 9.27%, showcasing profitability. However, there is room for improvement in EBIT and EBITDA margins at 12.71% and 15.03%, respectively, suggesting potential for operational efficiency gains.

Balance Sheet

The company's balance sheet is robust, with a low debt-to-equity ratio of 0.072, indicating low financial leverage and minimal debt burden. The return on equity is a healthy 6.91%, reflecting effective utilization of shareholder funds. The equity ratio is strong at 79.67%, highlighting a solid capital structure. Overall, the company's financial stability is commendable with low risk exposure.

Cash Flow

Strategic Education's cash flow position is solid, with an operating cash flow to net income ratio of 1.44, demonstrating strong cash generation relative to earnings. The free cash flow to net income ratio is 1.08, indicating adequate free cash flow generation. However, the free cash flow experienced a slight decline, suggesting potential areas for improvement in operational efficiency or capital expenditure management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.24B	1.22B	1.13B	1.07B	1.13B	1.03B
Gross Profit	588.48M	569.43M	509.02M	468.16M	523.42M	494.99M
EBITDA	210.01M	155.63M	170.43M	137.12M	214.00M	244.69M
Net Income	115.16M	112.68M	69.79M	46.67M	55.09M	86.27M
Balance Sheet
Total Assets	2.09B	2.05B	2.13B	2.16B	2.31B	2.30B
Cash, Cash Equivalents and Short-Term Investments	164.95M	184.02M	208.21M	222.82M	275.42M	195.07M
Total Debt	120.30M	125.23M	213.32M	259.28M	331.46M	282.78M
Total Liabilities	424.81M	387.24M	472.69M	525.96M	591.89M	547.49M
Stockholders Equity	1.67B	1.66B	1.65B	1.64B	1.71B	1.75B
Cash Flow
Free Cash Flow	124.46M	128.75M	80.18M	82.88M	131.09M	96.09M
Operating Cash Flow	166.26M	169.33M	117.12M	126.05M	180.53M	142.91M
Investing Cash Flow	-62.77M	-64.36M	-48.55M	-31.36M	-33.09M	-642.19M
Financing Cash Flow	-202.18M	-136.77M	-113.61M	-142.36M	-67.89M	279.19M

Strategic Education Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 81.96
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• 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 81.96 is above the 20-day moving average (MA) of 79.68, above the 50-day MA of 79.27, and below the 200-day MA of 86.28, indicating a neutral trend. The MACD of 1.02 indicates Negative momentum. The RSI at 61.31 is Neutral, neither overbought nor oversold. The STOCH value of 60.85 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
PRDO	78 Outperform	$2.14B	14.27	16.39%	1.64%	15.99%	13.25%
STRA	78 Outperform	$1.98B	17.26	6.89%	2.93%	4.31%	-1.08%
APEI	71 Outperform	$573.09M	29.96	10.20%	―	5.50%	338.59%
UTI	71 Outperform	$1.49B	23.66	23.11%	―	14.56%	127.02%
Sector *	63 Neutral	$20.50B	14.76	-2.72%	3.09%	1.90%	-4.74%
LINC	55 Neutral	$615.61M	42.22	8.27%	―	14.53%	75.66%
KLC	52 Neutral	$850.49M	35.79	-10.31%	―	3.85%	-208.51%

Strategic Education Corporate Events

Strategic Education Board Member Jerry Johnson Resigns

On May 21, 2025, Jerry Johnson resigned from the Board of Directors of Strategic Education, Inc. to focus on other professional commitments. His departure was not due to any disagreements with the company, and the company expressed gratitude for his service.