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Strayer Education Buys New York Code and Design Academy

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Strayer Education, Inc. (STRA - Free Report) acquired the New York Code and Design Academy (NYCDA) on Jan 13, 2016. New York City-based NYCDA will operate as a wholly owned subsidiary of Strayer Education and continue to offer non-degree web and mobile app development courses.

Strayer Education focuses on the educational needs of working adults. As people are increasingly using their mobiles and computers for everyday transactions, demand for professionals trained to develop web and mobile apps has been on the rise. In fact, the introduction of web and mobile app development courses should appeal to students who intend to upgrade their skills to match demand in the job market.

With improving market conditions, there has been growing demand for career-oriented programs that prepare students to be part of the skilled workforce. These programs allow students to pursue careers of their choice. Thus, the acquisition of NYCDA is a strategic fit for Strayer Education.

Overall, the company has been posting higher enrollment growth since past two quarters, driven by a consistent increase in continuing student enrollments. The upside in total enrollment was also driven by a solid improvement in student retention. The company has been taking initiative to drive enrollment levels, including affordability initiatives like a cut in tuition rates and the introduction of graduation funds.

Nonetheless, volatile starts, soft revenues and weak margins hurt Strayer Education’s results in the first three quarters of 2015. Despite total enrollment increase, revenue was soft owing to lower revenue per student. Revenue per student has been declining in the past few quarters, owing to the new pricing structure introduced in early 2014 that reduced tuition for new undergraduate students by 20%, so that more students are eligible for the Graduation Fund. It remains to be seen if new enrollment levels stabilize in the upcoming quarters.

Strayer Education carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the education industry include DeVry Education Group Inc. , Lincoln Educational Services Corporation (LINC - Free Report) and TAL Education Group , each carrying a Zacks Rank #2 (Buy). 

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