On Feb 25, Zacks Investment Research upgraded
Strayer Education, Inc.
) to a Zacks Rank #1 (Strong Buy). Strayer's share price has been
on an upswing following the release of solid fourth quarter
results on Feb 21.
Why the Upgrade?
Strayer Education's fourth-quarter 2013 adjusted earnings of
$1.32 per share surpassed the Zacks Consensus Estimate of 98
cents by 34.7%. We believe that the earnings beat was due to a 7%
decline in outstanding shares in the quarter as a result of
significant share repurchases made in the prior quarters.
Total revenue of $124.1 million beat the Zacks Consensus Estimate
of $119 million by 4.1%.Total revenue in the quarter fell 13%
from the comparable prior-year quarter due to continued weak
enrollment trends, partially offset by increase in revenue per
student. Revenue per student increased 5% during the quarter,
owing to higher student retention rate and phasing out of the
previous scholarships program.
The company began a cost reduction plan in the fourth quarter.
The plan, which resulted in a charge of approximately $55 million
in the fourth quarter, is expected to reduce annual operating
expenses by an estimated $50 million beginning 2014.
As part of this restructuring, Strayer University closed
approximately 20 physical locations predominantly in the Midwest.
The completion of the restructuring will allow the company to
allocate its resources in profitable areas and improve its
business in the near future.
The company is also expected to benefit from the recent
changes in educational policies. The policies will improve the
affordability of the programs and more students will be
encouraged to opt for higher education thus providing the much
needed impetus to enrollment levels.
APOLLO GROUP (APOL): Free Stock Analysis
NEW ORIENTAL ED (EDU): Free Stock Analysis
STRAYER EDUC (STRA): Free Stock Analysis
XUEDA EDUC-ADR (XUE): Free Stock Analysis
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Other Stocks to Consider
Investors interested in the education sector can also consider
Apollo Educational Group Inc.
New Oriental Education & Technology Group
Xueda Education Group
). All the companies have a Zacks Rank #2 (Buy).