Why Shares of Strayer Education Inc Popped

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  ) were moving to the head of the class today, jumping as much as 33% after a blowout fourth-quarter earnings report.

So what: The for-profit educator flew past EPS estimates of $0.98, posting a per-share profit of $1.32, while sliding revenues also beat expectations as sales declined 12.5%, to $124.1 million, against the consensus at $119.3 million. That wasn't the only good news, however, as new student enrollment seemed to be bottoming out. While overall student enrollment fell 14%, new student entrants declined only 2%, indicating that the company's revenue drop may soon be coming to an end.

Now what: Education stocks have gotten banged up over the last couple of years, but declining enrollments seem to be easing as the Strayer report indicates. The company also completed a restructuring initiative that will save $50 million a year, starting in 2014, which should further bolster the bottom line.  Strayer still trades at a P/E under 10 even after today's jump as the market has been expecting its numbers to continue to go south, but this was the second strong earnings beat we've seen in a row. Profits could start improving faster than the market thinks.   

What else will crush it in 2014?
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2849440, ~/Articles/ArticleHandler.aspx, 12/21/2014 3:09:31 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement