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Strategic Education (STRA) Boosts Workforce Edge Degree Programs

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Strategic Education, Inc. STRA or SEI’s unit Workforce Edge inked a deal with Dollar General to provide the latter’s employees with employer-paid degree programs offered at Strayer and Capella Universities.

The partnership will help Dollar General’s full-time employees to take advantage of the generous tuition assistance benefits, which began on Apr 4. The employees will be able to gain affordable professional and personal development degrees as well as reimburse eligible educational expenses to eliminate out-of-pocket tuition costs. They may utilize a yearly tuition assistance allocation to fund a new degree program at a higher education institution of their choice.

Karl McDonnell, president and CEO of SEI, said, "Dollar General continues to distinguish itself in the marketplace, and by announcing this comprehensive tuition assistance partnership, the company remains well-positioned to recruit and retain skilled employees. We’re looking forward to embarking on this journey with Dollar General as they empower their employees with access to educational opportunities."

SEI’s Support to Employers

Strategic Education supports more than 1,000 employers to upskill and retain their workforce and provides pioneering education solutions to beat the competition. With increasing demand from employers for job-ready candidates to address the skills gap in the United States, SEI has been providing various workforce-development programs.

SEI’s Education Technology Services segment is focused on developing and maintaining relationships with employers to build employee education benefits programs. The segment helps employer partners through Workforce Edge — a platform that provides employers a full-service education benefits administration solution — and Sophia Learning — which enables lower-cost education benefits programs through the use of low-cost online general education courses recommended by the American Council on Education for credit at other colleges and universities.

Launched in January 2021, Workforce Edge helps employers offer higher education options that are relevant, innovative and affordable to their workforce. During fourth-quarter 2021, the company introduced its new Workforce Edge product. With a coverage comprising Strayer and Capella Universities and schools from Noodle Partners, the company expects this platform to serve as a low-cost source of new enrolments.

In 2021, Workforce Edge signed 32 corporate agreements and collectively hired about 650,000 employees. SEI remains optimistic about these initiatives.

Share Price Performance

Shares of the company have increased 18.8% against the Zacks Schools industry’s 1.7% fall so far this year. The company is benefiting from Strayer and Capella Universities’ convenient, accessible and flexible educational programs.

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Yet, it has been experiencing lower demand for its services caused by a higher unemployment level. The company noted that the impact of rising unemployment was largely seen at Strayer due to the undergraduate student mix, including many first-time college students. Also, it has been witnessing increased competitive intensity, which resulted in advertising inflation and lowered the yield of marketing investments. Owing to these headwinds, the company now expects that the average total enrolment for SEI could be down in the mid-single digits in 2022.

The recent move is likely to aid the company’s top line and enrolment growth in the future.

Zacks Rank & Key Picks

SEI currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lincoln Educational Services Corporation LINC: Based in West Orange, NJ, this company provides career-oriented post-secondary education services to high school graduates and working adults in the United States. Improved operating performance at its campuses, consolidating facilities, a new welding program, a reinvigorated corporate partnership and changes in the admissions team have been favoring Lincoln.

Lincoln currently carries a Zacks Rank #1. The Zacks Consensus Estimate for 2022 earnings has been revised upward from 58 cents to 63 cents in the past 60 days. The projected figure indicates a 39.4% fall from the year-ago quarter’s levels.

Universal Technical Institute, Inc. UTI provides technical education training in automotive, diesel, collision repair and refinishing, motorcycle, marine and personal watercraft technologies.

The company’s expected earnings growth rate for fiscal 2022 stands at 100%. Universal Technical currently has a Zacks Rank #1.

TAL Education Group TAL: Based in Beijing, the company provides tutoring services to K-12 students in the People's Republic of China.

The company currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for fiscal 2023 earnings has improved almost 20% in the past 30 days. This suggests a 53.8% year-over-year growth.


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