Strategic Education, Inc. Just Missed EPS By 6.4%: Here's What Analysts Think Will Happen Next
It's been a sad week for Strategic Education, Inc. (NASDAQ:STRA), who've watched their investment drop 16% to US$79.06 in the week since the company reported its full-year result. It looks like the results were a bit of a negative overall. While revenues of US$1.0b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.4% to hit US$3.77 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Strategic Education
Taking into account the latest results, the most recent consensus for Strategic Education from five analysts is for revenues of US$1.19b in 2021 which, if met, would be a solid 16% increase on its sales over the past 12 months. Statutory per-share earnings are expected to be US$3.87, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$1.20b and earnings per share (EPS) of US$3.93 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$120, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Strategic Education analyst has a price target of US$146 per share, while the most pessimistic values it at US$100.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Strategic Education's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 23% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 22% annually. Factoring in the forecast slowdown in growth, it seems obvious that Strategic Education is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Strategic Education's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$120, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Strategic Education analysts - going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Strategic Education .
This article by Simply Wall St is general in nature. 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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