Strayer Earnings Beat Despite Y/Y Decline - Analyst Blog
May 03 2013 - 10:30AM
Zacks
Strayer Education Inc. (STRA) posted
first-quarter 2013 earnings of $1.59 per share, beating the Zacks
Consensus Estimate of $1.46 by 8.9%. Earnings were also better than
the company’s expected range of $1.45 – $1.47 per share. However,
earnings plunged significantly, by 24%, from $2.09 reported in the
year-ago period due to top-line decline.
Total revenue in the quarter dropped 8% from the comparable
prior-year quarter to $137.5 million due to lower enrollments and
revenue per student. Total revenue also missed the Zacks Consensus
Estimate of $140 million.
Quarter in Detail
Strayer University’s total enrollment for the 2013 spring term
declined 9% to 46,130 students due to decline in both continuing
student enrollments and new student enrollment. Continuing student
enrollments went down 8% year over year while new student
enrollments declined 14%.
Operating income in the quarter plummeted 27% to $29.9 million. The
operating margin contracted 550 basis points to 21.8% due to
decline in revenues and higher bad debt expenses. Bad debt expense
as a percentage of revenues was 4.0% in the first quarter, up 20
basis points from the prior-year quarter.
Other Financial Details
Strayer Education ended the quarter with cash and cash equivalents
of $50.8 million as of Mar 31, 2013 compared to $47.5 million as of
Dec 2012. During the quarter, the company repurchased stocks worth
$25 million. As of Mar 31, 2013, the company had $70 million worth
of stocks left under its share repurchase authorization.
Outlook
Strayer Education expects second-quarter 2013 earnings in the range
of $1.37 – $1.39 per share, based on the enrollment for the spring
term of 2013.
Strayer Education carries a Zacks Rank #4 (Sell). This
post-secondary education company has been witnessing decline in
enrollments over the past few months due to continued unemployment,
overall economic downturn and a subsequent decline in student
demand due to lower confidence in job prospects.
However, education stocks such as ChinaEdu
Corporation (CEDU), New Oriental Education &
Technology Group (EDU) and TAL Education
Group (XRS) are currently performing well and are worth
considering. All the three companies hold a Zacks Rank #2
(Buy).
CHINAEDU CP-ADR (CEDU): Free Stock Analysis Report
NEW ORIENTAL ED (EDU): Free Stock Analysis Report
STRAYER EDUC (STRA): Free Stock Analysis Report
TAL EDUCATN-ADR (XRS): Free Stock Analysis Report
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