Strategic Education, Inc. (NASDAQ: STRA)

Sector: Consumer Defensive Industry: Education & Training Services CIK: 0001013934
Market Cap 878.40 Mn
P/B 15.68
P/E 9.32
P/S 1.45
ROIC (Qtr) 6.45
Div Yield % 6.06
Rev 1y % (Qtr) 4.57
Total Debt (Qtr) 117.65 Mn
Debt/Equity (Qtr) 0.07
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About

Strategic Education, Inc. (SEI), a prominent player in the education industry, is publicly traded on the NASDAQ stock exchange under the symbol STRA. The company operates primarily in the United States and Australia, providing access to high-quality post-secondary education through its campus-based and online offerings. SEI's main business activities revolve around its subsidiaries, Capella University and Strayer University in the U.S., and Torrens University in Australia, all of which are accredited institutions of higher education. SEI generates...

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Investment thesis

Bull case

  • Strong operating cash flow of 174.91M provides robust 1.49x coverage of total debt 117.65M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 151.46M provide 8.23x coverage of short-term debt 18.41M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 625.97M provides 5.32x coverage of total debt 117.65M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 131.66M exceeds capital expenditure of 43.24M by 3.04x, indicating strong organic growth funding capability.
  • Operating cash flow of 174.91M provides solid 0.62x coverage of current liabilities 283.48M, showing strong operational health.

Bear case

  • Operating cash flow of 174.91M barely covers its investment activities of (49.73M), with a coverage ratio of -3.52, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 174.91M provides thin coverage of dividend payments of (58.10M) with a -3.01 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 151.46M provide limited coverage of acquisition spending of (50000), which is -3029.20x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 174.91M provides insufficient coverage of deferred revenue obligations of 151.90M, which is 1.15x, raising concerns about future service delivery capabilities.
  • Free cash flow of 131.66M represents just -77.54x of debt issuance (1.70M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Education & Training Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EDU New Oriental Education & Technology Group Inc. 9.35 Bn 24.58 1.82 0.78 Bn
2 TAL TAL Education Group 6.18 Bn 22.22 2.20 0.38 Bn
3 GHC Graham Holdings Co 5.47 Bn 12.27 1.91 1.17 Bn
4 LAUR Laureate Education, Inc. 5.20 Bn 25.55 3.29 0.44 Bn
5 LOPE Grand Canyon Education, Inc. 4.62 Bn 21.85 4.23 0.11 Bn
6 LRN Stride, Inc. 3.61 Bn 11.32 1.43 0.56 Bn
7 ATGE Covista Inc. 3.46 Bn 13.66 1.83 0.73 Bn
8 PRDO PERDOCEO EDUCATION Corp 2.84 Bn 42.39 1.73 0.06 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.44 0.71
EV to Cash from Ops. EV/CFO 7.59 6.80
EV to Debt EV to Debt 7.98 11.15
EV to EBIT EV/EBIT 5.84 112.78
EV to EBITDA EV/EBITDA 5.12 6.48
EV to Free Cash Flow [EV/FCF] EV/FCF 9.29 5.57
EV to Market Cap EV to Market Cap 1.07 582,173.64
EV to Revenue EV/Rev 1.55 1.74
Price to Book Value [P/B] P/B 15.68 -3.80
Price to Earnings [P/E] P/E 9.32 -1.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.96 11.73
Dividend Payout Ratio % Div Payout % (Qtr) 48.50 2.21
Dividend per Basic Share Div per Share (Qtr) 2.40 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 41.17 1.69
Interest Coverage Int. cover (Qtr) 0.00 53.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -10.96 -82.12
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -22.68 25.11
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 0.54
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -9.83 -39.04
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -6.46 -34.79
EBIT Growth (1y) % EBIT 1y % (Qtr) -9.31 -40.70
EBT Growth (1y) % EBT 1y % (Qtr) -9.31 -52.53
EPS Growth (1y) % EPS 1y % (Qtr) -8.33 -29.51
FCF Growth (1y) % FCF 1y % (Qtr) -8.82 -36.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.99 -3.42
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.59 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.27 0.01
Cash Ratio Cash Ratio (Qtr) 0.53 0.73
Current Ratio Curr Ratio (Qtr) 1.22 1.63
Debt to Equity Ratio Debt/Equity (Qtr) 0.07 3.83
Interest Cover Ratio Int Coverage (Qtr) 0.00 53.05
Times Interest Earned Times Interest Earned (Qtr) 0.00 53.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 16.60 -30.62
EBIT Margin % EBIT Margin % (Qtr) 12.90 -82.13
EBT Margin % EBT Margin % (Qtr) 12.90 -47.07
Gross Margin % Gross Margin % (Qtr) 47.90 50.48
Net Profit Margin % Net Margin % (Qtr) 9.10 -48.61