NEW YORK ( TheStreet) -- Strayer Education (Nasdaq: STRA) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, weak operating cash flow and a generally disappointing performance in the stock itself.
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- The gross profit margin for STRAYER EDUCATION INC is rather high; currently it is at 52.30%. 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 14.50% compares favorably to the industry average.
- STRA, with its decline in revenue, slightly underperformed the industry average of 4.1%. Since the same quarter one year prior, revenues fell by 10.7%. 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.
- STRAYER EDUCATION INC's earnings per share declined by 26.9% 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 33.6% in earnings ($5.86 versus $8.83).
- Net operating cash flow has significantly decreased to $6.18 million or 69.50% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
-- Written by a member of TheStreet Ratings Staff