Strategic Education (STRA) Boosts Campus Count in Texas

Strategic Education Inc.’s STRA wholly-owned subsidiary, Strayer University, has opened a new campus for working adults in El Paso, TX. The campus provides affordable and attainable degree options for associates and bachelors to masters’ level students.

The El Paso campus is designed to meet the rapidly evolving demand trends of job seekers as well as local employers. Also, the campus features leaner classroom model and has a diverse collection of courses to offer.

Strayer University has more than 70 campuses worldwide and the latest one mark the seventh campus within Texas.

Initiatives to Drive Growth

Strategic Education laid out various initiatives to improve affordability, as well as academic and career outcomes for students, which will help to boost enrollments, thereby driving revenues. The company emphasizes on convenient, accessible and flexible educational programs that are aimed at teaching new skills to employees.

In a bid to give better academic and career solutions to students, the company merged Strayer Education and Capella Education on Aug 1, 2018. Both the university’s educational programs are specifically designed to meet the educational needs of working adults in targeted professions. Also, they provide weekend, evening and online educational courses that are well suited for the work-day schedules of adults. These career-oriented programs allow students to achieve their professional goals.

The company has already been benefiting from the ongoing initiatives, which is evident from recently released third-quarter results. Notably, Strayer Education’s revenues increased 6.7% to $114.5 million on a year-over-year basis. Total enrollment grew 9%, new student enrollments rose 11.9% and continuing student enrollments increased 8.3% from a year ago.

Strategic Education’s adjusted operating margin in the quarter was up 620 basis points (bps) from the year-ago quarter. Adjusted EBITDA also grew more than double from the prior-year figure of $14.2 million. Specifically, operating margin of Strayer University increased 290 bps in the same period.

Share Price Performance

Shares of Strategic Education, currently a Zacks Rank #3 (Hold) company, have broadly outperformed the industry in the past year. Its shares have gained 49.1% against the industry’s decline of 12.5% in the said period. Also, earnings estimates for 2018 and 2019 have been upwardly revised by 1.6% and 0.5%, respectively, over the past seven days, reflecting analysts’ optimism surrounding the stock's earnings growth potential.

Key Picks

Some better-ranked stocks from the Zacks Schools industry are K12 Inc. LRN, RYB Education, Inc. RYB and Adtalem Global Education Inc. ATGE. While K12 and RYB Education sport a Zacks Rank #1 (Strong Buy), Adtalem carries a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank stocks here.

K12’s earnings per share are expected to increase 11.8% in 2018.

RYB Education is expected to record an EPS growth rate of 195.5% next year.

Adtalem has an expected earnings growth rate of 1.8% for the current year.

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