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For-Profit Education Stocks: Winners & Losers of 2010

Strayer Education

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Strayer Education (STRA)

Year-to-Date Share Price Percentage Loss: -32.91%

Market Capitalization: $2.18 Billion

Strayer Education, like Corinthian's Everest colleges, averaged student loan repayment rates in the low 20s last year, according to research from the Institute for College Access and Success, a student-advocacy group. At those levels, Strayer would be ineligible for federal aid if proposed regulatory legislation is enacted.

Strayer recently beat third-quarter expectations thanks to increased student enrollment and higher tuition. The for-profit education company also announced a 33% increase to its annual dividend from $3 to $4, to be paid on a quarterly basis. The higher quarterly dividend of $1 per share was paid Dec. 10.

>>10 Top Dividend Stocks Increasing Payouts

Strayer posted net income of $23.3 million, or $1.72 per share, compared with year-earlier earnings of $16.7 million, or $1.21 per share. Revenue jumped 29% to $147.6 million, from $114.4 million.

Strayer said enrollment at its Strayer University for the 2010 fall term increased 12%. Across its campus and online system, continuing student enrollments increased 17% while new student enrollments decreased 2%.

Strayer forecast current quarter EPS in a range between $2.64 and $2.66, well below expectations for fourth-quarter EPS of $2.99. Analysts' EPS consensus has since come down to $2.67. Strayer's full-year guidance for EPS in a range between $9.63 and $9.65 also came up short. Analysts had been expecting 2010 EPS of $9.93, and later revised the figure to $9.64.

The post-secondary education provider said it plans to open eight new campuses next year and implement a 5% tuition increase effective January 2011. Strayer forecast 2011 earnings of up to $11.50 per share assuming a 13% increase in annual student enrollment at Strayer University in 2011.


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