Financial Review: Strayer Education (STRA) and Education Management (EDMC)

Strayer Education (NASDAQ: STRA) and Education Management (OTCMKTS:EDMC) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Valuation and Earnings

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This table compares Strayer Education and Education Management’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Strayer Education $454.85 million 2.45 $20.61 million $1.82 54.85
Education Management N/A N/A N/A N/A N/A

Strayer Education has higher revenue and earnings than Education Management.

Insider & Institutional Ownership

98.2% of Strayer Education shares are held by institutional investors. Comparatively, 0.0% of Education Management shares are held by institutional investors. 6.7% of Strayer Education shares are held by insiders. Comparatively, 81.2% of Education Management shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Strayer Education pays an annual dividend of $1.00 per share and has a dividend yield of 1.0%. Education Management does not pay a dividend. Strayer Education pays out 54.9% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Strayer Education and Education Management, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Strayer Education 0 0 3 0 3.00
Education Management 0 0 0 0 N/A

Strayer Education currently has a consensus price target of $101.00, suggesting a potential upside of 1.17%. Given Strayer Education’s higher possible upside, equities analysts plainly believe Strayer Education is more favorable than Education Management.

Volatility & Risk

Strayer Education has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500. Comparatively, Education Management has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500.

Profitability

This table compares Strayer Education and Education Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Strayer Education 4.53% 17.75% 11.52%
Education Management N/A N/A N/A

Summary

Strayer Education beats Education Management on 9 of the 11 factors compared between the two stocks.

Strayer Education Company Profile

Strayer Education, Inc. is an education services holding company. The Company provides post-secondary education and other academic programs, through its subsidiaries, Strayer University (the University) and New York Code and Design Academy (NYCDA). As of December 31, 2016, the University offered undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, nursing, public administration and criminal justice at 74 physical campuses located in the Mid-Atlantic and Southern regions of the United States, and online. The University also offers an executive Master of Business Administration (MBA) online through its Jack Welch Management Institute. Its subsidiary, NYCDA, provides non-degree courses in Web and application software development, primarily at its campus in New York City. Each undergraduate degree program includes courses in oral and written communication skills, as well as mathematics.

Education Management Company Profile

Education Management Corporation provides post-secondary education in North America. It offers academic programs to students through campus-based and online instruction to earn undergraduate and graduate degrees, and various specialized non-degree diplomas in a range of disciplines comprising business, culinary, design, education, fashion, health sciences, information technology, legal, media arts, and psychology and behavioral sciences. The company was founded in 1962 and is headquartered in Pittsburgh, Pennsylvania.

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