Rating Change #6
Strayer Education Inc
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
Highlights from the ratings report include:
- The gross profit margin for STRAYER EDUCATION INC is rather high; currently it is at 54.60%. Regardless of STRA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, STRA's net profit margin of 16.00% compares favorably to the industry average.
- STRA, with its decline in revenue, slightly underperformed the industry average of 3.2%. Since the same quarter one year prior, revenues fell by 13.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Consumer Services industry and the overall market, STRAYER EDUCATION INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The share price of STRAYER EDUCATION INC has not done very well: it is down 16.60% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- STRAYER EDUCATION INC's earnings per share declined by 25.4% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, STRAYER EDUCATION INC reported lower earnings of $8.83 versus $9.70 in the prior year. For the next year, the market is expecting a contraction of 21.6% in earnings ($6.92 versus $8.83).
Strayer Education, Inc., through its subsidiary, Strayer University, provides post-secondary education services for working adults. The company has a P/E ratio of 13.7, equal to the average diversified services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Strayer has a market cap of $1.33 billion and is part of the
industry. Shares are up 15.2% year to date as of the close of trading on Friday.
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