Analysis Of Strayer Education

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Analysis of Strayer Education (STRA)

Company Description
Strayer Education Inc, is a small cap company within the Education and Training Services industry, specifically in the services sector of the industry.
Founded in 1982 and based in Herdon, Virginia provides post-secondary education for working adults. The company through their subsidiary Strayer University offer both undergraduate and graduate programs in disciplines such as accounting, education, information technology and many others. The company offers their services at 80 physical locations and strong on-line classroom environment.
Industry & Sector
The educational/training service sector comprises of establishments that provide education instruction and training in a wide range of subjects. The instructions and training offered are provided by specialized establishments such as, schools, colleges, universities, and training centers. The establishments can be private or publically held, and be profit or non-profit. Major companies include Apollo Group, Career Education Corporation (CEC), ITT Educational Services, and Kaplan (all based in the US).
The industry as a whole has the following totals:
Market Capitalization: 6B
Price / Earnings: 683.8
Price / Book: 4.6
Net Profit Margin (mrq): 2.4%
Price To Free Cash Flow (mrq): 16.8
Return on Equity: 4.2%
Total Debt / Equity: 156.5
Dividend Yield: 0.5%

The education and training industry is going through a period of rapid development. The demand for education has steadily risen every year as customers are demanding high-value education services. Demand for certification classes are driven by employment trends in the medical, high technology, and manufacturing industries. The profitability of individual companies depends ...

... middle of paper ...

...ficult to compete in higher education business in the future.

Valuation Method
There are many methods analysts use in valuing a business, but the more common used methods are Market Valuation, Discounted Cash Flow, Comparable Transactions, and Multiple Analysis.
The valuation method that would be preferable for Strayer Education is the DCF method that is the most thorough way to value a company. There are two ways to value a company using the DCF
Approach:
• Adjusted Present Value (APV) method
• Weighted Average Cost of Capital (WACC) method
Both methods require calculation of a company’s free cash flows (FCF) as well as the net present value (NPV) of these FCFs. The sum of all future discounted flows is the company's present value. If the value arrived at through DCF analysis is higher than the current cost of the investment; the opportunity may be a good one.

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