Strategic Education (STRA) Q1 Earnings Lag, Enrollment Low
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Strategic Education, Inc. or SEI STRA reported lackluster results for first-quarter 2022. Earnings and revenues missed the Zacks Consensus Estimate and declined on a year-over-year basis due to lower contributions from all three segments.
Shares of the company fell 4.34% on Apr 29, post earnings release.
Inside The Headlines
SEI reported adjusted earnings of 54 cents per share, which missed the Zacks Consensus Estimate of 74 cents by 27% and declined 64.7% from the year-ago quarter’s levels.
Strategic Education Inc. Price, Consensus and EPS Surprise
Strategic Education Inc. price-consensus-eps-surprise-chart | Strategic Education Inc. Quote
Total revenues of $258.9 million lagged the consensus estimate of $262 million by 1.3% and declined 10.8% from the prior-year quarter’s level. Adjusted revenues fell 11.5% year over year.
Segment Details
SEI currently operates in three reportable segments — U.S. Higher Education or USHE, Education Technology Services or ETS (earlier known as Alternative Learning) and Australia/New Zealand or ANZ.
The USHE segment comprises Strayer and Capella Universities. Segment’s revenues fell 13.6% year over year to $195.8 million due to lower fourth-quarter enrollment and revenue-per-student. Student enrollment declined 12.6% from the year-ago quarter’s level to 78,172 students. FlexPath enrollment was 20% of USHE enrollment compared with 17% in the same period of 2021. The segment’s operating margin contracted significantly to 7.9% from 21.1% a year ago.
The ETS segment includes Employer Solutions, Workforce Edge and Sophia Learning. The segment’s quarterly revenues came in at $14.6 million, up 16.4% year over year, backed by growth in Sophia Learning subscriptions. Employer affiliated enrollment was 23% of USHE enrollment compared with 20.7% in the year-ago period. Its operating margin came in at 32.3% for the reported quarter, down from 47% a year ago.
The ANZ segment includes Torrens University, Think Education and Media Design School. Revenues in the segment totaled $48.5 million, down 5.4% year over year and 9.3% on an adjusted basis. Adjusted loss from operation was $0.7 million in the reported quarter, in line with the prior-year quarter’s levels. Student enrollment within ANZ fell 4.2% to 20,575 during the reported period.
Operating Highlights
The adjusted operating margin of 7.5% was down 1,060 basis points from the year-ago quarter’s figure of 18.1%. Adjusted EBITDA in the reported quarter was $38.4 million, down 45.6% from $70.6 million in the prior-year quarter.
Financial Details
As of Mar 31, 2022, STRA recorded cash and cash equivalents of $293.4 million compared with $268.9 million at 2021-end.
Cash provided by operating activities was $78.8 million in the first quarter of 2022 compared with $56.6 million in the comparable year-ago period. Capital expenditures were $9.7 million compared with $12.7 million a year ago. Capital expenditures for 2022 are expected to be approximately $50 million.
Zacks Rank & Key Picks
SEI currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Consumer Discretionary sector are Funko, Inc. FNKO, Bluegreen Vacations Holding Corporation BVH and Clarus Corporation CLAR.
Funko sports a Zacks Rank #1 at present. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average.
The Zacks Consensus Estimate for Funko’s current financial year sales and EPS suggests growth of 22.6% and 26.8%, respectively, from the year-ago period’s reported levels.
Bluegreen Vacations sports a Zacks Rank #1 at present. BVH has a trailing four-quarter earnings surprise of 425.1%, on average.
The Zacks Consensus Estimate for BVH’s current financial year sales and EPS indicates growth of 8.3% and 20.8%, respectively, from the year-ago period’s reported levels.
Clarus sports a Zacks Rank #1 at present. The company has a trailing four-quarter earnings surprise of 12.3%, on average.
The Zacks Consensus Estimate for CLAR’s 2022 sales and EPS suggests growth of 25.3% and 23.1%, respectively, from the year-ago period’s levels.
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