For-Profit, Investors, Required, University & College - Written by Elbert Chu on Thursday, July 28, 2011 19:43 - 0 Comments
Strayer Q2 Profit Drops 17% As New Enrollment Slides for Third Straight Quarter
Strayer Education Inc. (NASDAQ: STRA) shares closed down 14.66% to close at $122.25 on their earning report that included a miss and news of lower new enrollments.
Strayer and many of its peers in the for-profit college industry have seen new-student enrollments fall amid tighter admissions practices and increased public scrutiny over the schools’ educational values. Strayer, which caters mainly to working adults completing their degrees rather than students new to higher education, has seen competition in its segment of the market increase as other schools look to enroll more-qualified students who stand a better chance of graduating.
New-student enrollment tumbled 21% in the latest period, while total enrollments slid 8.5% to 47,790.
“We now have essentially 3 quarters in a row of minus 20% and so that’s a fact and something that we’re dealing with,” said Robert Silberman, Strayer Chairman of the Board and CEO.
On the call, Silberman said they currently have 92 campuses with 75% of their revenues from federal Title IV loans. Strayer’s failure rate also ticked up from 9.5% to 10.5% in Q2. Strayer’s mix of corporate and institutionally funded student is currently at 25%.
During the Q&A a question was raised about whether there was a problem finding quality faculty as Strayer expands across the country. “That’s one of the things that makes the business model, I think, quite powerful. There’s a lot of qualified teaching faculty who are underutilized, particularly in research universities, and who want to be in an institution like ours,” said Silberman.
According to Silberman, Strayer repurchased $55M worth of shares in Q2, for a total of nearly 10% of their float.
Motley Fool has a good run down on the bottom line:
The traditional classroom and Internet education company’s second-quarter results weren’t all that bad. The company beat EPS estimates by $0.14 and just marginally missed revenue projections, coming in at $163.8 million versus the $166 million consensus. Where shareholders really got a rude awakening was in Strayer’s third-quarter guidance. New student enrollment plunged 21%, while continuing student enrollment fell 5%, which contributed to the company’s EPS guidance of $1.04-$1.06. This is a mile short of the $1.37 the Street had been looking for.
For a further financial discussion: Strayer 2Q Profit Drops 17% As Enrollment Slides – WSJ.com.
Motley Fool: What you need to know.
Full Strayer earnings call at Seeking Alpha.
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