Education Services Stocks Q2 Teardown: Strategic Education (NASDAQ:STRA) Vs The Rest
As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q2. Today, we are looking at education services stocks, starting with Strategic Education (NASDAQ:STRA).
A whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.
The 8 education services stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.3% while next quarter’s revenue guidance was 0.7% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Amidst this news, education services stocks have had a rough stretch. On average, share prices are down 6% since the latest earnings results.
Strategic Education (NASDAQ:STRA)
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ:STRA) is a career-focused higher education provider.
Strategic Education reported revenues of $312.3 million, up 8.5% year on year. This print exceeded analysts’ expectations by 1.3%. Overall, it was a strong quarter for the company with a decent beat of analysts’ operating margin and earnings estimates.
“We are pleased with strong second quarter results as our organization remains focused on promoting economic mobility for working adults,” said Karl McDonnell, Chief Executive Officer of Strategic Education.
The stock is down 28.2% since reporting and currently trades at $86.76.
Is now the time to buy Strategic Education? Access our full analysis of the earnings results here, it’s free.
Best Q2: Universal Technical Institute (NYSE:UTI)
Founded in 1965, Universal Technical Institute (NYSE: UTI) is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.
Universal Technical Institute reported revenues of $177.5 million, up 15.8% year on year, outperforming analysts’ expectations by 2.7%. The business had a very strong quarter with an impressive beat of analysts’ earnings estimates and a decent beat of analysts’ operating margin estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 13.3% since reporting. It currently trades at $15.20.
Is now the time to buy Universal Technical Institute? Access our full analysis of the earnings results here, it’s free.
Lincoln Educational (NASDAQ:LINC)
Established in 1946, Lincoln Educational (NASDAQ:LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.
Lincoln Educational reported revenues of $102.9 million, up 16.1% year on year, exceeding analysts’ expectations by 2.3%. Still, it was a slower quarter as it posted a miss of analysts’ earnings estimates.
Interestingly, the stock is up 1.5% since the results and currently trades at $11.82.
Read our full analysis of Lincoln Educational’s results here.
Adtalem (NYSE:ATGE)
Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.
Adtalem reported revenues of $409.9 million, up 12.4% year on year. This number beat analysts’ expectations by 2.8%. Overall, it was a strong quarter as it also produced a decent beat of analysts’ operating margin estimates and full-year revenue guidance beating analysts’ expectations.
Adtalem scored the highest full-year guidance raise among its peers. The stock is down 2.8% since reporting and currently trades at $72.59.
Read our full, actionable report on Adtalem here, it’s free.
Perdoceo Education (NASDAQ:PRDO)
Formerly known as Career Education Corporation, Perdoceo Education (NASDAQ:PRDO) is an educational services company that specializes in postsecondary education.
Perdoceo Education reported revenues of $166.7 million, down 10.6% year on year. This result topped analysts’ expectations by 3.6%. More broadly, it was a mixed quarter as it failed to impress in some other areas of the business.
Perdoceo Education scored the biggest analyst estimates beat but had the slowest revenue growth among its peers. The stock is down 14% since reporting and currently trades at $21.35.
Read our full, actionable report on Perdoceo Education here, it’s free.
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