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Strategic Education (STRA) Down 0.4% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Strategic Education (STRA - Free Report) . Shares have lost about 0.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Strategic Education due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Strategic Education, Inc., or SEI, reported stellar results in second-quarter 2024. Its quarterly earnings and revenues topped the Zacks Consensus Estimate and increased year over year.
The quarterly results reflect solid growth across the company’s three reportable segments, attributable to continued enrollment growth in the U.S. Higher Education (“USHE”) segment, especially employer-affiliated enrollments, and total enrollment improvement in the Australia/New Zealand (ANZ) segment. Moreover, the Education Technology Services segment portrayed solid performance, mainly driven by the growth in Sophia Learning subscriptions.
Inside the Headlines
SEI reported adjusted earnings per share (EPS) of $1.33, which topped the Zacks Consensus Estimate of $1.20 by 10.8% and rose impressively from the year-ago quarter’s 82 cents.
Total revenues of $312.3 million surpassed the consensus estimate of $304 million by 2.7% and increased 8.7% from the year-ago quarter’s level. On a constant-currency basis, revenues increased 8.9% to $313.4 million in the quarter.
Segmental Details
USHE: This segment comprises Strayer and Capella Universities. The segment’s revenues increased 6.9% year over year to $216.6 million, backed by solid enrollment.
Student enrollment increased 8.4% from the year-ago quarter’s level to 87,077 students. FlexPath enrollment was 22% of USHE enrollment compared with 21% in the year-ago quarter.
During the quarter, the operating margin rose to 9.2% from 3.3% in the year-ago quarter.
Education Technology Services: This segment includes Employer Solutions, Workforce Edge and Sophia Learning. The segment’s quarterly revenues were $24.5 million, up 25.6% year over year, backed by solid growth in Sophia Learning subscriptions and employer-affiliated enrollment.
Sophia Learning’s average total subscribers increased 37% from the year-ago period’s levels. Employer-affiliated enrollment was 29.3% of USHE enrollment compared with 27.1% in the year-ago period.
Its operating margin was 40.9% in the reported quarter, up by a whopping 930 basis points (bps) from a year ago.
ANZ: This segment includes Torrens University, Think Education and Media Design School. The segment's revenues were $71.1 million, up 8.6% year over year, driven by higher enrollment and revenue-per-student. On a constant-currency basis, revenues rose 10.3% to $72.2 million year over year.
Student enrollment within ANZ rose 6.4% to 19,113 students during the reported quarter compared with the year-ago quarter.
The operating margin was 19.8%, down from 21.8% in the same period of 2023. On a constant-currency basis, the operating income margin was 19.9%, down from 21.8% in the year-ago period.
Operating Highlights
Adjusted operating income was up 61.4% to $43.9 million from $27.2 million in the year-ago quarter. The adjusted operating margin of 14.1% expanded a whopping 460 bps from the year-ago quarter.
Adjusted EBITDA in the reported quarter was $63.3 million, up from $45.4 million in the year-ago quarter.
Financial Details
As of Jun 30, 2024, SEI had cash and cash equivalents of $230.1 million, up from $168.5 million in 2023-end. Long-term debt at the second quarter of 2024-end was $61.3 million, slightly down from $61.4 million in 2023-end.
Cash provided by operating activities was $101.9 million in the first six months of 2024, up from $40.7 million in the comparable year-ago period. In the first half of 2024, capital expenditures were $19.9 million compared with $17.8 million a year ago.
In the second quarter of 2024, consolidated bad debt expense was 4.3% of revenue, slightly down from 4.4% for the same period in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -21.86% due to these changes.
VGM Scores
Currently, Strategic Education has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Strategic Education has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Strategic Education (STRA) Down 0.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Strategic Education (STRA - Free Report) . Shares have lost about 0.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Strategic Education due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Strategic Education Q2 Earnings & Revenues Beat Estimates
Strategic Education, Inc., or SEI, reported stellar results in second-quarter 2024. Its quarterly earnings and revenues topped the Zacks Consensus Estimate and increased year over year.
The quarterly results reflect solid growth across the company’s three reportable segments, attributable to continued enrollment growth in the U.S. Higher Education (“USHE”) segment, especially employer-affiliated enrollments, and total enrollment improvement in the Australia/New Zealand (ANZ) segment. Moreover, the Education Technology Services segment portrayed solid performance, mainly driven by the growth in Sophia Learning subscriptions.
Inside the Headlines
SEI reported adjusted earnings per share (EPS) of $1.33, which topped the Zacks Consensus Estimate of $1.20 by 10.8% and rose impressively from the year-ago quarter’s 82 cents.
Total revenues of $312.3 million surpassed the consensus estimate of $304 million by 2.7% and increased 8.7% from the year-ago quarter’s level. On a constant-currency basis, revenues increased 8.9% to $313.4 million in the quarter.
Segmental Details
USHE: This segment comprises Strayer and Capella Universities. The segment’s revenues increased 6.9% year over year to $216.6 million, backed by solid enrollment.
Student enrollment increased 8.4% from the year-ago quarter’s level to 87,077 students. FlexPath enrollment was 22% of USHE enrollment compared with 21% in the year-ago quarter.
During the quarter, the operating margin rose to 9.2% from 3.3% in the year-ago quarter.
Education Technology Services: This segment includes Employer Solutions, Workforce Edge and Sophia Learning. The segment’s quarterly revenues were $24.5 million, up 25.6% year over year, backed by solid growth in Sophia Learning subscriptions and employer-affiliated enrollment.
Sophia Learning’s average total subscribers increased 37% from the year-ago period’s levels. Employer-affiliated enrollment was 29.3% of USHE enrollment compared with 27.1% in the year-ago period.
Its operating margin was 40.9% in the reported quarter, up by a whopping 930 basis points (bps) from a year ago.
ANZ: This segment includes Torrens University, Think Education and Media Design School. The segment's revenues were $71.1 million, up 8.6% year over year, driven by higher enrollment and revenue-per-student. On a constant-currency basis, revenues rose 10.3% to $72.2 million year over year.
Student enrollment within ANZ rose 6.4% to 19,113 students during the reported quarter compared with the year-ago quarter.
The operating margin was 19.8%, down from 21.8% in the same period of 2023. On a constant-currency basis, the operating income margin was 19.9%, down from 21.8% in the year-ago period.
Operating Highlights
Adjusted operating income was up 61.4% to $43.9 million from $27.2 million in the year-ago quarter. The adjusted operating margin of 14.1% expanded a whopping 460 bps from the year-ago quarter.
Adjusted EBITDA in the reported quarter was $63.3 million, up from $45.4 million in the year-ago quarter.
Financial Details
As of Jun 30, 2024, SEI had cash and cash equivalents of $230.1 million, up from $168.5 million in 2023-end. Long-term debt at the second quarter of 2024-end was $61.3 million, slightly down from $61.4 million in 2023-end.
Cash provided by operating activities was $101.9 million in the first six months of 2024, up from $40.7 million in the comparable year-ago period. In the first half of 2024, capital expenditures were $19.9 million compared with $17.8 million a year ago.
In the second quarter of 2024, consolidated bad debt expense was 4.3% of revenue, slightly down from 4.4% for the same period in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -21.86% due to these changes.
VGM Scores
Currently, Strategic Education has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Strategic Education has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.