Why Strayer Education Failed Investors Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Strayer Education (NASDAQ: STRA  ) dropped 12% after the company released earnings.

So what: Revenue fell 10% in the second quarter, to $132.0 million, and net income fell 29%, to $15.0 million, or $1.42 per share. Both figures were better than estimates, but the trend of lower enrollment and revenue has investors selling shares today. 

Now what: The most concerning data point is that enrollment was down 13% for the summer term for Strayer. New student enrollment was down a whopping 17%, which doesn't bode well for earnings going forward. Momentum is clearly against the company, and even though shares trade at 12.5 times forward earnings estimates, this stock looks like a value trap to me.

Interested in more info on Strayer Education? Add it to your watchlist by clicking here.


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