Strayer Education Inc.
), a for-profit education company, is slated to report its
fourth-quarter 2011 financial results on February 16, 2012. The
current Zacks Consensus Estimate for the quarter is $2.26 per
share, representing an estimated year-over-year decrease of about
17%. Revenue, as per the Zacks Consensus Estimate, is $155
Strayer Education's third-quarter earnings of $1.20 per share
surpassed the Zacks Consensus Estimate of $1.06, but plunged 30%
from $1.72 in the year-ago quarter.
Total revenue for the quarter dropped 8% from the prior-year
quarter to $135.9 million. The decrease was attributable to a fall
in enrollment, partially offset by an increase in tuition fees.
Total revenue also fell short of the Zacks Consensus Estimate of
Agreement of Estimate Revisions
Of the 13 analysts covering the stock, none revised their
estimates in either direction in the last 30 days.
Magnitude of Estimate Revisions
The Zacks Consensus estimate remained stable in the last 30 days
as the risk-reward ratio remains well balanced for the stock.
The significant risk looming over the education sector is the
fall in student enrollment. Strayer Education registered a drop of
10% in total campus-based students in the third quarter. Moreover,
the company registered a fall of 15% in global online students.
Further, the company also announced that new student enrollment
also dropped 15%.
To encounter lower enrollment and boost profits, Strayer
Education implemented a 3% hike in tuition fees effective January
2012. The initiative is expected to provide an upside to the
company's top-line results.
Positive Earnings Surprise History
With respect to earnings surprises, Strayer Education has topped
the Zacks Consensus Estimate over the last four quarters in the
range of 3.4% to 13.2%. The average remained at 6.8%, indicating
that the company has surpassed the Zacks Consensus Estimate by the
same magnitude in the trailing four quarters.
Strayer Education's rich legacy and its strong focus toward
working adults enabled it to establish a healthy position in the
for-profit post-secondary education industry. Moreover, the
company's sustained effort to expand educational programs will
boost the enrollment numbers.
Further, the current economic condition is somewhat in favor of
the education companies as postsecondary enrollments tend to rise
as both unemployed and employed workers return to school to
However, we remain concerned about the continued decline in the
enrollments, which is likely to hamper the results of the education
companies. Moreover, another for-profit education company,
Capella Education Company
), expects new student enrollment to decline in the coming
Currently, Strayer Education holds a Zacks #4 Rank, which
translates into a short-term Sell recommendation. However,
considering the fundamentals, we have a long-term Neutral rating on
CAPELLA EDUCATN (
): Free Stock Analysis Report
STRAYER EDUC (
): Free Stock Analysis Report
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