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1. Company Snapshot

1.a. Company Description

Strategic Education, Inc., through its subsidiaries, provides education services through campus-based and online post-secondary education, and programs to develop job-ready skills.It operates through three segments: U.S. Higher Education, Australia/New Zealand, and Education Technology Services.The company operates Strayer University that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, public administration, and criminal justice at physical campuses located in the eastern United States, as well as through online; non-degree web and mobile application development courses through Hackbright Academy and Devmountain; and an executive MBA online through its Jack Welch Management Institute.


It also operates Capella University, an online post-secondary education institution that provides various bachelor's, master's, and doctoral degree programs to working adults in arts and sciences, business and technology, counseling and human services, education, nursing and health sciences, psychology, and public service leadership.The company operates Torrens University, which offers undergraduate, graduate, higher degree by research, and specialized degree courses primarily in business, design and creative technology, health, hospitality, and education fields through online and on physical campuses located in Australia; Think Education, a vocational training organization; and Media Design School, which provides industry-endorsed courses in 3D animation and visual effects, game art and programming, graphic and motion design, digital media artificial intelligence, and creative advertising in New Zealand.It also offers Workforce Edge, a platform to employers that provides education benefits administration solutions; and Sophia Learning, which enables lower cost education benefits programs.


The company was founded in 1892 and is headquartered in Herndon, Virginia.

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1.b. Last Insights on STRA

Strategic Education, Inc.'s recent performance was driven by strong Q4 2025 earnings, with revenue increasing 4.0% to $1,268.2 million, led by growth in its Education Technology Services segment. The company's quarterly earnings of $1.74 per share beat the Zacks Consensus Estimate of $1.47 per share. Institutional investors, such as SG Americas Securities LLC and Cerity Partners LLC, have increased their stakes in the company. Additionally, Strategic Education was upgraded to a Zacks Rank #1 (Strong Buy), citing growing optimism about its earnings prospects.

1.c. Company Highlights

2. Strategic Education's Q4 2025 Earnings: A Strong Finish to a Robust Year

Strategic Education's fourth quarter 2025 revenue increased 4% year-over-year, with operating income growth of 35% and a 390 basis point expansion in operating margin to 16.9%. Earnings per share was $1.74, beating estimates of $1.47, up 38% year-over-year. For the full year 2025, revenue increased 4%, operating income increased 25%, and adjusted earnings per share was $6.21, up 28%. The company's AI-driven productivity improvements resulted in approximately $30 million of expense reductions in 2025, with plans to generate at least an additional $70 million of expense savings through 2027.

Publication Date: Mar -01

📋 Highlights
  • Full-Year Revenue and Profit Growth:: 2025 revenue grew 4% year-over-year, with operating income up 25% and adjusted EPS rising 28% to $6.21.
  • Education Technology Services Outperformance:: Generated $150M revenue (40% growth), 40% operating margin, and $59M operating income (38% growth).
  • AI-Driven Cost Savings:: Achieved $30M expense reductions in 2025, with $70M+ savings targeted by 2027, boosting margins by 390 bps in Q4.
  • Strong Cash Flow and Shareholder Returns:: $247M pretax cash flow in 2025, $58M in dividends, $140M in buybacks, and $200M remaining in repurchase authorization.
  • 2026 Outlook:: Notional model projects 4-6% revenue CAGR and 200 bps annual AOI margin expansion, supported by operational efficiency and segment growth.

Segment Performance

The Education Technology Services segment grew revenue by 40% to nearly $150 million, with operating income increasing 38% to $59 million and an operating margin of 40%. Sophia Learning's average total subscribers grew 47% and revenue by 41% in the fourth quarter. Workforce Edge had a record year, with strong revenue growth driven by employer-affiliated enrollment and platform fees. U.S. Higher Education revenue increased 2% in the fourth quarter and 1% for the full year, driven by a 6% increase in revenue per student.

Operational Efficiency and Cash Generation

Australia/New Zealand's total enrollment decreased by 2% for both the fourth quarter and the full year, but the segment had significant productivity gains, with operating expenses decreasing 6% for the quarter and flat for the full year. The company generated $247 million in pretax cash from operations in 2025 and returned approximately $58 million to owners through dividends and $140 million in share repurchases.

Valuation and Outlook

With a P/E Ratio of 14.42 and an EV/EBITDA of 8.39, the stock appears reasonably valued. The company's guidance for 2026 reflects continued performance in line with the 4% to 6% revenue CAGR and 200 bps annual AOI margin expansion, aligning with analysts' estimates of 4.0% revenue growth. The company's strong cash generation and commitment to returning capital to shareholders are positives, with $200 million remaining on its share repurchase authorization and a Dividend Yield of 2.92%.

Return on Investment and Capital Structure

The company's ROIC of 6.77% and ROE of 7.66% indicate a decent return on investment, while its Net Debt / EBITDA ratio of -0.14 highlights its strong balance sheet with no debt and $153 million of cash and marketable securities. The Free Cash Flow Yield of 7.97% is also attractive, suggesting that the company is generating sufficient cash to support its operations and return capital to shareholders.

3. NewsRoom

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Strategic Education, Inc. Publishes 2025 Annual Report and Letter to Shareholders

Mar -11

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.51%)

6. Segments

U.S. Higher Education

Expected Growth: 4.5%

Strategic Education, Inc.'s U.S. Higher Education segment growth of 4.5% is driven by increasing demand for online education, strategic acquisitions, and a strong brand reputation. Additionally, the segment benefits from a growing need for workforce development and skills training, as well as a focus on student affordability and flexibility.

Australia/New Zealand

Expected Growth: 4.2%

Strong demand for online education in Australia and New Zealand, driven by a growing working-age population and increasing adoption of online learning platforms. Strategic partnerships with local institutions and government initiatives supporting vocational education and training also contribute to the 4.2% growth.

Education Technology Services

Expected Growth: 5.5%

Strategic Education's Education Technology Services segment growth of 5.5% is driven by increasing demand for online and hybrid learning, strategic partnerships with educational institutions, and expansion of its technology-enabled services. Additionally, the segment benefits from the growing need for workforce development and skills training, as well as the company's investments in artificial intelligence and data analytics.

7. Detailed Products

Strayer University

A private university that offers undergraduate and graduate degree programs in fields such as business, education, and health sciences.

Capella University

An online university that offers undergraduate and graduate degree programs in fields such as business, education, and health sciences.

New York Code + Design Academy

A coding bootcamp that offers immersive training programs in software development and data science.

Sophia Learning

An online learning platform that offers affordable and flexible general education courses for college credit.

Strategic Education Online

A platform that offers online courses and degree programs in partnership with leading universities and organizations.

8. Strategic Education, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Strategic Education, Inc. is medium because while there are some alternative education providers, they are not a significant threat to the company's business model.

Bargaining Power Of Customers

The bargaining power of customers for Strategic Education, Inc. is low because the company has a diverse student base and no single customer has significant bargaining power.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Strategic Education, Inc. is medium because while the company relies on some key suppliers, it has some flexibility to switch to alternative suppliers if needed.

Threat Of New Entrants

The threat of new entrants for Strategic Education, Inc. is high because the education industry is constantly evolving and new online education providers are emerging, posing a threat to the company's market share.

Intensity Of Rivalry

The intensity of rivalry for Strategic Education, Inc. is high because the education industry is highly competitive, and the company faces intense competition from other education providers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 4.92%
Debt Cost 4.87%
Equity Weight 95.08%
Equity Cost 6.19%
WACC 6.12%
Leverage 5.18%

11. Quality Control: Strategic Education, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Graham

A-Score: 6.5/10

Value: 7.6

Growth: 7.3

Quality: 6.5

Yield: 2.0

Momentum: 8.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Laureate Education

A-Score: 6.2/10

Value: 2.9

Growth: 5.6

Quality: 6.0

Yield: 5.0

Momentum: 10.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Strategic Education

A-Score: 5.3/10

Value: 6.3

Growth: 4.0

Quality: 6.2

Yield: 6.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Adtalem Global Education

A-Score: 5.3/10

Value: 5.7

Growth: 7.4

Quality: 7.4

Yield: 0.0

Momentum: 7.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Grand Canyon Education

A-Score: 5.2/10

Value: 3.1

Growth: 6.7

Quality: 8.1

Yield: 0.0

Momentum: 5.5

Volatility: 7.7

1-Year Total Return ->

View Full Report
Stock-Card
Stride

A-Score: 4.3/10

Value: 7.7

Growth: 8.3

Quality: 7.4

Yield: 0.0

Momentum: 0.5

Volatility: 2.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

80.72$

Current Price

80.72$

Potential

-0.00%

Expected Cash-Flows