A Look at Strategic Education’s (STRA) Valuation Following Strong Q3 Results and EdTech Segment Growth

Strategic Education (STRA) delivered third-quarter results that outpaced expectations, as revenue and earnings topped forecasts. The strong showing was driven by impressive growth in its Education Technology Services segment, particularly through Sophia Learning and Workforce Edge.

See our latest analysis for Strategic Education.

Alongside its strong quarterly results and upbeat commentary, Strategic Education’s share price momentum has struggled to keep pace. The stock has experienced a year-to-date share price decline of 17.7% and a one-year total shareholder return of -21.8%. Positive earnings and signals of innovation have stabilized recent trading, but the stock still has ground to recover in the eyes of longer-term investors.

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After recent outperformance and rising analyst optimism, the question remains: is Strategic Education now trading at a discount, or has its future growth already been fully reflected in the current share price?

Most Popular Narrative: 26.4% Undervalued

Market watchers are taking notice as the narrative’s fair value for Strategic Education is set at $103.33, while the stock just closed at $76.02. With analyst consensus sharply above current trading levels, all eyes are on what’s driving this optimism and whether the gap will close.

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.

Want to know what’s fueling the bulls? The fair value here is no accident. It is built on a wave of projected earnings and margin expansion that rivals some of the hottest names in education tech. Which aggressive financial assumptions power this price target? Discover the full story and decide if you agree with the case for a rerating.

Result: Fair Value of $103.33 (UNDERVALUED)

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

However, there are still risks, such as changing international regulations or increased scholarships, that could dampen revenue growth and put pressure on profit margins in the future.

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 dig into the numbers on your own terms, you’re free to craft your own narrative 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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