On Apr 4, 2014, we issued an updated research report on
Strayer Education Inc.
On Feb 21, this post-secondary education provider reported strong
fourth quarter 2013 results on the back of improvement in new
enrollment trends. Despite declining year over year, Strayer
Education beat the Zacks Consensus Estimate for both earnings and
revenue in the quarter.
Strayer has been witnessing weak enrollment trends due to
continued unemployment, overall economic downturn and subsequent
decline in student demand. In order to address the concern, the
board of trustees approved an approximate 20% cut in Strayer's
undergraduate tuition costs.
The new tuition fee has been put into from Jan 1, 2014. The
initiative improved college affordability and its value
proposition, and thus, attract cost-conscious students. The
combination of lower undergraduate tuition fee and the Graduation
Fund (which offer financial assistance to students in the final
year of their programs) is expected to cut the cost of a Strayer
University degree by 25%. In fact, the company's enrolment trends
have started improving lately.
In the fourth quarter of 2013, though undergraduate new
enrollments declined, the rate of decline narrowed from the
previous term. Moreover, this Zacks Rank #1 (Strong Buy)
education company witnessed a double-digit increase in new
graduate enrollment during the quarter, which is encouraging.
Revenue per student also grew in the quarter owing to higher
student retention rate.
However, the company expects revenue per students to decline in
each of the quarters of 2014 due to cuts in tuition costs - which
keeps us concerned.
Key Picks from the Sector
Some other stocks in the education sector include
Corinthian Colleges Inc.
Apollo Education Group, Inc.
). While Corinthian Colleges sports a Zacks Rank #1, K12 and
Apollo Education carry a Zacks Rank #2 (Buy).
APOLLO GROUP (APOL): Free Stock Analysis
CORINTHIAN COL (COCO): Free Stock Analysis
K12 INC (LRN): Free Stock Analysis Report
STRAYER EDUC (STRA): Free Stock Analysis
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