Strayer Education's Q2 Earnings & Rev Beat - Analyst Blog

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Strayer Education, Inc. 's ( ESI ) second-quarter 2013 earnings of $1.42 per share beat the Zacks Consensus Estimate of $1.38 by 2.9%. Earnings were also better than the company expected range of $1.37 - $1.39 per share. However, earnings declined by 23%, from $1.85 reported in the year-ago period due to top-line decline.

Total revenue in the quarter dropped 10% from the comparable prior-year quarter to $132.0 million due to lower enrollments. However, total revenue beat the Zacks Consensus Estimate of $131 million by 0.8%.

Quarter in Detail

Strayer University's total enrollment for the 2013 summer term declined 13% to 38,627 students due to decline in both continuing student enrollments and new student enrollment. Continuing student enrollments went down 12% year over year while new student enrollments declined 17%. However, the company witnessed strong business in Jack Welch Management Institute, with the highest continuation rate in the University.  

Operating income in the quarter decreased 27.0% to $26.3 million. Despite lower costs in the quarter, operating margin contracted 480 basis points to 19.9% due to decline in revenues. Bad debt expense as a percentage of revenues was 4.3% in the second quarter, down 10 basis points from the prior-year quarter.

Other Financial Details

Strayer Education ended the quarter with cash and cash equivalents of $67.5 million as of Jun 30, 2013 compared with $50.8 million as of Mar 31, 2013. During the quarter, the company did not repurchase any stocks. As of Jun 30, 2013, the company had $70 million worth of stocks left under its share repurchase authorization.  

During the quarter, Strayer's business, management and accounting programs were accredited by the Accreditation Council for Business Schools and Programs (ACBSP). Its master of education program is accredited by the Teacher Education Accreditation Council (TEAC).

Outlook

Strayer Education expects solid business in third-quarter 2013 based on the total enrollment for the summer term of 2013. Revenue per student is expected to be flat for full year 2013.

Strayer Education carries a Zacks Rank #2 (Hold).

Some other education companies that are performing well are ATA, Inc. ( ATAI ), Capella Education Company ( CPLA ) and TAL Education Group ( XRS ). Both ATA and Capella carry a Zacks Rank #1 (Strong Buy), while TAL Education Group carries a Zacks Rank #2.



ATA INC-ADR (ATAI): Free Stock Analysis Report

CAPELLA EDUCATN (CPLA): Free Stock Analysis Report

ITT EDUCATIONAL (ESI): Free Stock Analysis Report

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

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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: ATAI , CPLA , ESI , XRS

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