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School Stocks' Q2 Earnings Due on Aug 1: STRA, CPLA, CECO

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The second-quarter earnings season is past the halfway mark, with 265 S&P 500 members having already released their quarterly results, according to the latest Earnings Preview.

As of Jul 27, 2018, total earnings for these S&P 500 members were up 23.6% year over year on more than 10.1% higher revenues. Of these, 80.8% surpassed earnings estimates, while 72.1% beat revenue expectation. Total earnings for the S&P 500 index are likely to increase 23.6% from the same period last year on 8.8% higher revenues.

A Look at School Industry

In the school industry, within the consumer discretionary sector, currently the Strayer Education Inc. (STRA - Free Report) and Capella Education Inc. merger is in focus apart from earnings releases. On Oct 30, 2017, for-profit school companies Strayer Education and Capella Education agreed to an all-stock merger in a deal valued at $1.9 billion. The combined company would be renamed "Strategic Education Inc." with the closure of the deal and will trade under the STRA ticker symbol. The deal is expected to close in the third quarter of 2018.

Meanwhile, the Trump administration is set to revise for-profit education industry regulations, as announced by the U.S. Department of Education last year. The department intends to bring about changes to the Borrower Defense to Repayment (BDR) and Gainful Employment (GE) system, introduced during Obama’s reign.

The for-profit education companies are poised to surge, given the friendly approach of the Trump administration toward these companies.

Apart from the much-needed regulatory support, industry giants are finding innovative ways to compete in an increasingly competitive education landscape and deliver returns to shareholders. In order to boost growth, school companies have resorted to aggressive cost-cutting measures through significant layoffs and campus closings.

In early July, Adtalem Global Education (ATGE - Free Report) entered into an agreement to transfer complete ownership of Carrington College to a family-owned career college based in California, namely San Joaquin Valley College, Inc.

The for-profit education companies are investing in digital capabilities and stepping up social media efforts to increase their brand value as well as boost enrollment growth. The for-profits are also forging corporate and community college partnerships to educate their workforce. Additionally, the companies are improving their technology and infrastructure, increasing investments to improve academic quality and retain students, buying complementary businesses, and regularly introducing new programs and specializations to boost student outcomes.

Total earnings of the consumer discretionary sector are expected to increase 11.5% on 5.7% higher revenues.

School Stocks Reporting on Aug 1

Three companies from the school industry are set to report second-quarter results on Aug 1. Let's see how things are shaping up for their respective announcements.

Our research shows that when a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) stock is combined with a positive Earnings ESP, the chance of beating earnings estimates is high. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Strayer Education, Inc., a regional proprietary institution of higher education, offering undergraduate and graduate degree programs, is slated to release quarterly results before the opening bell.

The company delivered a positive surprise of 10.8% in the last reported quarter. However, as the company missed estimates in two of the past four quarters, it recorded an average negative surprise of 2.36%.

Our proven model hints at an earnings beat for the company in the to-be-reported quarter, as Strayer has an Earnings ESP of +9.83% and Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company expects its total enrollments at Strayer University to grow 8% to approximately 46,800 students in the second quarter from the prior-year quarter. New student enrollments are anticipated to increase approximately 7%. Continuing student enrollments are likely to increase approximately 8%. Revenue per student in the quarter is likely to decline 5%. Tax rate for the quarter is expected in the range of 27-28%.

Overall, for the second quarter, the Zacks Consensus Estimate for earnings is pegged at 87 cents, reflecting a 5.4% year-over-year decrease. Meanwhile, the consensus estimate for revenues is pegged at $115.8 million, implying a 2.7% increase.
 

Strayer Education, Inc. Price and EPS Surprise

 

Strayer Education, Inc. Price and EPS Surprise | Strayer Education, Inc. Quote

Capella Education Company, through its wholly-owned subsidiaries, provides online post-secondary education services in the United States, focused primarily on working adults. The company is slated to release quarterly results before the opening bell.

The company delivered a positive surprise of 3.45% in the last reported quarter. Also, the company surpassed estimates in three of the past four quarters, resulting in an average positive surprise of 2.33%.

We cannot conclusively predict a beat for the company in the quarter to be reported as it has an Earnings ESP of -2.23% and a Zacks Rank #2.

Overall, for the second quarter, the Zacks Consensus Estimate for earnings is pegged at $1.04, reflecting a 15.6% year-over-year increase. The consensus estimate for revenues is pegged at $110.1 million, implying a 0.4% increase.
 

Career Education Corporation (CECO - Free Report) , an educational services company, is slated to release quarterly results after the closing bell.

The company delivered a positive surprise of 13.64% in the last reported quarter. Also, the company surpassed estimates in three of the past four quarters, resulting in an average positive surprise of 142.88%.

We cannot conclusively predict a beat for the company in the second quarter as it has an Earnings ESP of 0.00% and a Zacks Rank #3.

Overall, for the second quarter, the Zacks Consensus Estimate for earnings is pegged at 19 cents, reflecting a 171.4% year-over-year increase. The consensus estimate for revenues is pegged at $140.5 million, implying a 3.9% decrease.

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