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Strategic Education (STRA) Q3 Earnings Top, Enrollments Up
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Strategic Education, Inc. or SEI’s (STRA - Free Report) shares jumped more than 8% on Nov 7, following its third-quarter 2019 earnings release. The company’s earnings and revenues not only topped analysts’ expectation but also grew from the year-ago level. The positive performance was mainly backed by strong top-line numbers across segments, given higher enrollment.
This for-profit education company reported adjusted earnings of $1.28 per share, surpassing the Zacks Consensus Estimate of $1.25 by 2.4%. Also, the reported figure increased 39.1% from the year-ago quarter.
Total revenues of $241.7 million surpassed the consensus estimate of $237 million by 2%. Notably, the reported figure also jumped 50.2% from the prior-year level.
Segment Details
SEI currently operates in three reportable segments: Strayer (accounting for 52.9% of total third-quarter revenues), Capella (45.7%) and Non-Degree Programs (1.4%).
Strayer Segment: The Strayer segment consists of Strayer University, which includes programs offered through the Jack Welch Management Institute.
Strayer University’s revenues grew 11.7% year over year to $127.8 million due to higher enrollment. Total enrollment grew 11% from the year-ago level to 50,582 students. Enrollment of new and continuing students rose 4% and 13% from the year-ago quarter, respectively. The segment’s operating margin also increased 420 basis points (bps) to 14.6% during the quarter.
Capella Segment: The Capella segment consists solely of Capella University.
The segment’s third-quarter revenues came in at $110.5 million, reflecting 152.4% year-over-year growth backed by higher enrollment and increasing revenue-per-learner.
Total enrollment at the University grew 2% from the year-ago quarter to 38,451 students. New and continuing student enrollment increased 7% and 1% year over year, respectively. The upside was mainly driven by improved performance of FlexPath, which comprises 33% of Capella University’s Bachelors and Master’s degrees total enrollment.
Its adjusted operating margin came in at 16.9% in the reported quarter, down 10 bps from the year-ago level.
Non-Degree Programs Segment: The Non-Degree Programs segment comprises Hackbright Academy, DevMountain, the New York Code + Design Academy and Sophia.
Revenues from the segment increased to $3.4 million from the year-ago figure of $2.7 million. Loss from operations was $0.4 million in third-quarter 2019, narrower than a loss of $1.7 million in the year-ago period.
Strategic Education Inc. Price, Consensus and EPS Surprise
Adjusted operating margin in the reported quarter was 15.3%, up 350 bps year over year. Adjusted EBITDA also increased a notable 49.7% from a year ago to $50.9 million.
Financial Details
As of Sep 30, 2019, it recorded cash and cash equivalents of $397.1 million compared with $311.7 million at 2018-end.
During the first nine months of 2019, the company's cash provided by operating activities was $141.4 million versus $14.6 million of cash used in operating activities a year ago.
Zacks Rank
SEI, which shares space with Laureate Education Inc. (LAUR - Free Report) , Adtalem Global Education Inc. (ATGE - Free Report) and American Public Education, Inc. (APEI - Free Report) in the Zacks Schools industry, currently carries a Zacks Rank #4 (Sell).
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Strategic Education (STRA) Q3 Earnings Top, Enrollments Up
Strategic Education, Inc. or SEI’s (STRA - Free Report) shares jumped more than 8% on Nov 7, following its third-quarter 2019 earnings release. The company’s earnings and revenues not only topped analysts’ expectation but also grew from the year-ago level. The positive performance was mainly backed by strong top-line numbers across segments, given higher enrollment.
This for-profit education company reported adjusted earnings of $1.28 per share, surpassing the Zacks Consensus Estimate of $1.25 by 2.4%. Also, the reported figure increased 39.1% from the year-ago quarter.
Total revenues of $241.7 million surpassed the consensus estimate of $237 million by 2%. Notably, the reported figure also jumped 50.2% from the prior-year level.
Segment Details
SEI currently operates in three reportable segments: Strayer (accounting for 52.9% of total third-quarter revenues), Capella (45.7%) and Non-Degree Programs (1.4%).
Strayer Segment: The Strayer segment consists of Strayer University, which includes programs offered through the Jack Welch Management Institute.
Strayer University’s revenues grew 11.7% year over year to $127.8 million due to higher enrollment. Total enrollment grew 11% from the year-ago level to 50,582 students. Enrollment of new and continuing students rose 4% and 13% from the year-ago quarter, respectively. The segment’s operating margin also increased 420 basis points (bps) to 14.6% during the quarter.
Capella Segment: The Capella segment consists solely of Capella University.
The segment’s third-quarter revenues came in at $110.5 million, reflecting 152.4% year-over-year growth backed by higher enrollment and increasing revenue-per-learner.
Total enrollment at the University grew 2% from the year-ago quarter to 38,451 students. New and continuing student enrollment increased 7% and 1% year over year, respectively. The upside was mainly driven by improved performance of FlexPath, which comprises 33% of Capella University’s Bachelors and Master’s degrees total enrollment.
Its adjusted operating margin came in at 16.9% in the reported quarter, down 10 bps from the year-ago level.
Non-Degree Programs Segment: The Non-Degree Programs segment comprises Hackbright Academy, DevMountain, the New York Code + Design Academy and Sophia.
Revenues from the segment increased to $3.4 million from the year-ago figure of $2.7 million. Loss from operations was $0.4 million in third-quarter 2019, narrower than a loss of $1.7 million in the year-ago period.
Strategic Education Inc. Price, Consensus and EPS Surprise
Strategic Education Inc. price-consensus-eps-surprise-chart | Strategic Education Inc. Quote
Operating Highlights
Adjusted operating margin in the reported quarter was 15.3%, up 350 bps year over year. Adjusted EBITDA also increased a notable 49.7% from a year ago to $50.9 million.
Financial Details
As of Sep 30, 2019, it recorded cash and cash equivalents of $397.1 million compared with $311.7 million at 2018-end.
During the first nine months of 2019, the company's cash provided by operating activities was $141.4 million versus $14.6 million of cash used in operating activities a year ago.
Zacks Rank
SEI, which shares space with Laureate Education Inc. (LAUR - Free Report) , Adtalem Global Education Inc. (ATGE - Free Report) and American Public Education, Inc. (APEI - Free Report) in the Zacks Schools industry, currently carries a Zacks Rank #4 (Sell).
You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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