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Strategic Education (STRA) Stock Up 12.1% on Q1 Earnings Beat
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Strategic Education, Inc. or SEI (STRA - Free Report) reported stellar results in first-quarter 2020, wherein the company’s earnings and revenues not only topped analysts’ expectations but also grew from the year-ago level. The uptick was mainly backed by strong top-line numbers, and margins in Strayer and Capella universities. Shares of this for-profit education company gained more than 12%, following the earnings release.
It reported adjusted earnings of $2.11 per share, which surpassed the Zacks Consensus Estimate of $1.99 by 6% and increased 27.1% from the year-ago quarter.
Total revenues of $265.3 million also surpassed the consensus estimate of $259 million by 2.4%. Notably, the reported figure also jumped 7.6% from the prior-year level.
Strategic Education Inc. Price, Consensus and EPS Surprise
SEI currently operates in two reportable segments: Strayer (accounting for 54.9% of total first-quarter 2020 revenues) and Capella (45.1%).
Strayer University: Notably, this segment now comprises revenues and operating expenses of DevMountain and Hackbright Academy software development bootcamps. Also, starting in the first quarter, Strayer University adopted a new enrollment reporting census date, which occurs approximately two weeks following the start of the academic term. All historical enrollment data has been revised using the new census date.
Strayer University’s revenues grew 11.4% year over year to $145.7 million due to higher enrollment and revenue-per-student. Total enrollment grew 11% from the year-ago level to 55,337 students. Enrollment of new and continuing students rose 7% and 12% from the year-ago quarter, respectively. The segment’s operating margin also increased 690 basis points (bps) to 25.1% during the quarter.
Capella University: Starting in the first quarter, Capella University consolidated two different enrollment reporting census dates into a single date, which occurs approximately two weeks following the start of the academic term. All historical enrollment data has been revised accordingly.
The segment’s quarterly revenues came in at $119.6 million, reflecting 3.4% year-over-year growth backed by higher enrollment.
Total enrollment at the university grew 4% from the year-ago quarter to 41,200 students. New and continuing student enrollment increased 17% and 1% year over year, respectively. The upside was mainly driven by improved performance of FlexPath, which comprises 35% of Capella University’s Bachelor’s and Master’s degrees total enrollment.
Notably, the university received approval from the Higher Learning Commission to offer the Doctor of Nursing Practice program via FlexPath within second-half 2020.
Its operating margin came in at 22.2% in the reported quarter, up 10 bps from the year-ago level.
Operating Highlights
Adjusted operating margin in the reported quarter was 23.8%, up 420 bps year over year. Adjusted EBITDA was $76.5 million during the reported period compared with $61 million a year ago.
Financial Details
As of Mar 31, 2020, SEI had cash, cash equivalents, and marketable securities of $506.3 million compared with $491.2 million and $420.7 million on Dec 31 and Mar 31 in the prior year. Notably, the company has no debt. It had $250 million of undrawn credit as of Mar 31, 2020.
Cash provided by operating activities was $68.7 million in the quarter, up 17.1% from $58.7 million a year ago.
The company believes that these financial resources are sufficient to support the ongoing operations of its two universities during this uncertainty arising from the COVID-19 outbreak. Accordingly, the company does not plan to seek COVID-19-related financial support from the Federal government or any other governmental entity.
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Strategic Education (STRA) Stock Up 12.1% on Q1 Earnings Beat
Strategic Education, Inc. or SEI (STRA - Free Report) reported stellar results in first-quarter 2020, wherein the company’s earnings and revenues not only topped analysts’ expectations but also grew from the year-ago level. The uptick was mainly backed by strong top-line numbers, and margins in Strayer and Capella universities. Shares of this for-profit education company gained more than 12%, following the earnings release.
It reported adjusted earnings of $2.11 per share, which surpassed the Zacks Consensus Estimate of $1.99 by 6% and increased 27.1% from the year-ago quarter.
Total revenues of $265.3 million also surpassed the consensus estimate of $259 million by 2.4%. Notably, the reported figure also jumped 7.6% from the prior-year level.
Strategic Education Inc. Price, Consensus and EPS Surprise
Strategic Education Inc. price-consensus-eps-surprise-chart | Strategic Education Inc. Quote
Segment Details
SEI currently operates in two reportable segments: Strayer (accounting for 54.9% of total first-quarter 2020 revenues) and Capella (45.1%).
Strayer University: Notably, this segment now comprises revenues and operating expenses of DevMountain and Hackbright Academy software development bootcamps. Also, starting in the first quarter, Strayer University adopted a new enrollment reporting census date, which occurs approximately two weeks following the start of the academic term. All historical enrollment data has been revised using the new census date.
Strayer University’s revenues grew 11.4% year over year to $145.7 million due to higher enrollment and revenue-per-student. Total enrollment grew 11% from the year-ago level to 55,337 students. Enrollment of new and continuing students rose 7% and 12% from the year-ago quarter, respectively. The segment’s operating margin also increased 690 basis points (bps) to 25.1% during the quarter.
Capella University: Starting in the first quarter, Capella University consolidated two different enrollment reporting census dates into a single date, which occurs approximately two weeks following the start of the academic term. All historical enrollment data has been revised accordingly.
The segment’s quarterly revenues came in at $119.6 million, reflecting 3.4% year-over-year growth backed by higher enrollment.
Total enrollment at the university grew 4% from the year-ago quarter to 41,200 students. New and continuing student enrollment increased 17% and 1% year over year, respectively. The upside was mainly driven by improved performance of FlexPath, which comprises 35% of Capella University’s Bachelor’s and Master’s degrees total enrollment.
Notably, the university received approval from the Higher Learning Commission to offer the Doctor of Nursing Practice program via FlexPath within second-half 2020.
Its operating margin came in at 22.2% in the reported quarter, up 10 bps from the year-ago level.
Operating Highlights
Adjusted operating margin in the reported quarter was 23.8%, up 420 bps year over year. Adjusted EBITDA was $76.5 million during the reported period compared with $61 million a year ago.
Financial Details
As of Mar 31, 2020, SEI had cash, cash equivalents, and marketable securities of $506.3 million compared with $491.2 million and $420.7 million on Dec 31 and Mar 31 in the prior year. Notably, the company has no debt. It had $250 million of undrawn credit as of Mar 31, 2020.
Cash provided by operating activities was $68.7 million in the quarter, up 17.1% from $58.7 million a year ago.
The company believes that these financial resources are sufficient to support the ongoing operations of its two universities during this uncertainty arising from the COVID-19 outbreak. Accordingly, the company does not plan to seek COVID-19-related financial support from the Federal government or any other governmental entity.
Zacks Rank
SEI — which shares space with Adtalem Global Education Inc. (ATGE - Free Report) , Laureate Education Inc. (LAUR - Free Report) and American Public Education, Inc. (APEI - Free Report) in the Zacks Schools industry — currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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