The More Analysts Learn, the More They like Strayer
Kopecki, Dawn, Beckford, Tanaya, The Washington Times (Washington, DC)
The Washington area's demand for a highly educated work force has helped to nearly quadruple the stock price of Strayer Education since the company went public last July.
Trading on the Nasdaq market, where the stock closed at $38.50 Thursday, the company has seen annual growth rates topping 20 percent for earnings and revenue the past several years and will continue to outperform the market, analysts say.
The 104-year-old Strayer College, the Washington company's wholly owned subsidiary, specializes in catering its business and information technology classes to working adults.
The number of students at Strayer has grown from 1,500 students at 10 campuses in Maryland, the District and Virginia eight years ago to some 8,000 students.
"Adult education and information technology . . . those are the hot areas in looking at the post-secondary market," said Bob Craig, an analyst at Everen Securities Inc. in Cleveland. "This company basically operates at the intersection of both of those."
Mr. Craig said he thinks the stock will at least match the market the next six months and will outperform it over the long haul.
The company, which made $45 million in 1996, is part of the $200 billion educational services industry. Analysts say Strayer stands out among similar companies, such as DeVry and ITT Educational Services, for a number of reasons. It has no debt, is the only one to pay a dividend and has one of the lowest price-to-earnings ratios in its peer group.
The company also has the highest profit margins in the business at around 25 percent.
"People realize that private initiatives in education are, I think, becoming more popular because it's needed and because private education systems can change more quickly than publicly funded [schools]," said Harry Wilkins, Strayer's chief financial officer. …