Strayer Earnings Beat Despite Y/Y Decline - Analyst Blog


Strayer Education Inc. ( STRA ) posted first-quarter 2013 earnings of $1.59 per share, beating the Zacks Consensus Estimate of $1.46 by 8.9%. Earnings were also better than the company's expected range of $1.45 - $1.47 per share. However, earnings plunged significantly, by 24%, from $2.09 reported in the year-ago period due to top-line decline.

Total revenue in the quarter dropped 8% from the comparable prior-year quarter to $137.5 million due to lower enrollments and revenue per student. Total revenue also missed the Zacks Consensus Estimate of $140 million.

Quarter in Detail

Strayer University's total enrollment for the 2013 spring term declined 9% to 46,130 students due to decline in both continuing student enrollments and new student enrollment. Continuing student enrollments went down 8% year over year while new student enrollments declined 14%.

Operating income in the quarter plummeted 27% to $29.9 million. The operating margin contracted 550 basis points to 21.8% due to decline in revenues and higher bad debt expenses. Bad debt expense as a percentage of revenues was 4.0% in the first quarter, up 20 basis points from the prior-year quarter.

Other Financial Details

Strayer Education ended the quarter with cash and cash equivalents of $50.8 million as of Mar 31, 2013 compared to $47.5 million as of Dec 2012. During the quarter, the company repurchased stocks worth $25 million. As of Mar 31, 2013, the company had $70 million worth of stocks left under its share repurchase authorization.  


Strayer Education expects second-quarter 2013 earnings in the range of $1.37 - $1.39 per share, based on the enrollment for the spring term of 2013.

Strayer Education carries a Zacks Rank #4 (Sell). This post-secondary education company has been witnessing decline in enrollments over the past few months due to continued unemployment, overall economic downturn and a subsequent decline in student demand due to lower confidence in job prospects.

However, education stocks such as ChinaEdu Corporation ( CEDU ), New Oriental Education & Technology Group ( EDU ) and TAL Education Group ( XRS ) are currently performing well and are worth considering. All the three companies hold a Zacks Rank #2 (Buy).

CHINAEDU CP-ADR (CEDU): Free Stock Analysis Report

NEW ORIENTAL ED (EDU): Free Stock Analysis Report

STRAYER EDUC (STRA): Free Stock Analysis Report

TAL EDUCATN-ADR (XRS): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CEDU , EDU , STRA , XRS

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