Strategic Education (STRA): Assessing Valuation as Earnings Grow but Share Price Lags

Strategic Education (STRA) has been grinding through a mixed stretch, with the share price down over the past year even as revenue and net income continue to grow. That gap is where things get interesting.

See our latest analysis for Strategic Education.

At around $80.77, the stock has bounced modestly in the past week, but the year to date share price return remains clearly negative. This suggests that despite steady fundamental progress, sentiment and risk perception are still catching up with the longer term total shareholder return record.

If STRA has you rethinking where education fits in your portfolio, this could be a good moment to broaden your search and explore fast growing stocks with high insider ownership.

With Strategic Education delivering solid revenue and earnings growth while the share price lags both its history and analyst targets, is this a rare value window for patient investors, or is the market already pricing in tomorrow’s expansion?

Most Popular Narrative: 21.8% Undervalued

With the narrative fair value sitting at $103.33 against a last close of $80.77, the gap points to meaningful upside if the thesis holds.

The Education Technology Services segment is experiencing significant growth, with revenue increasing by more than 30% in 2024, primarily through the Sophia Learning direct-to-consumer portal and expanding corporate partnerships, potentially boosting earnings. The transition of the Best Buy partnership to an all inclusive degree program at no cost to employees could lead to increased enrollment and revenue for the U.S. Higher Education segment.

Read the complete narrative.

Curious how steady mid single digit revenue growth, rising margins and a richer future earnings multiple all combine into that upside case? The full narrative unpacks the exact assumptions, timing, and scale of the expected earnings step up, plus how long the market is assumed to reward those higher profits.

Result: Fair Value of $103.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, tighter Australian student visa settings and rising ETS operating costs could easily derail margin expansion and temper that upbeat long term earnings trajectory.

Find out about the key risks to this Strategic Education narrative.

Build Your Own Strategic Education Narrative

If you see the story differently or want to stress test the assumptions with your own inputs, you can build a custom view in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Strategic Education.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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