Strayer Education Inc  (STRA) Trade Now »     Rate STRA  -  Discuss STRA  -  Add to Watch List        

STRA... You want an education?  Cash upfront.  You need financing?  I don't care.  Cash upfront.

The securitization of private education loans, auto loans, credit in general will remain slow.  And this does not bode well for STRA.

Employers don't want employees with online degrees.  If they were to give financial aid, they're going to make sure the employee goes to a real university.  So the only way attendees is through private credit markets.  Oh wait, I forgot, the world's financial institutions are so mutually overleveraged, credit markets don't exist anymore.

Strayer's downhill.

Sell.

Strayer University Online Programs

Undergraduate Admission Requirements

Investors in for-profit education stocks are seeing gains this morning after Apollo Group earnings were released.  Revenue crossed the $1,000,000,000 mark this past quarter.  With revenue at a new record high, and growing by 27% over the past year, it truly looks like the company (and the sector in general) is sidestepping much of the economic weakness during this recession.  Student enrollment was 22.6% higher in the company’s fiscal third quarter which includes the final semester of the school year (fiscal year end is August 31).

Investors in for-profit education stocks are seeing gains this morning after Apollo Group earnings were released.  Revenue crossed the $1,000,000,000 mark this past quarter.  With revenue at a new record high, and growing by 27% over the past year, it truly looks like the company (and the sector in general) is sidestepping much of the economic weakness during this recession.  Student enrollment was 22.6% higher in the company’s fiscal third quarter which includes the final semester of the school year (fiscal year end is August 31).

Summary:

Strayer Education (STRA) is in a state of a contradiction in the eyes of the market. It is treated as a “defensive” play and yet trades like it is a growth stock. To resolve this contradiction, one of these beliefs must be wrong. I would contend that both of these beliefs are wrong. The stock is not trading within fundamentals and is more likely to be valued lower (lower multiple, lower reported earnings) in the quarters ahead.

I’ve had a quick look at education stocks in the US and they are a pocket of relative strength.

Education tends to be relatively defensive in tough economic times because people are reluctant to cut back spending on their children’s education.

Some even believe it is counter-cyclical as people made redundant ride out the downturn in colleges, while others who are employed try to bolster their credentials and improve employment prospects.