Why Strayer Education Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of for-profit education provider Strayer Education (NAS: STRA) surged 16% on Thursday after its quarterly new student sign-ups were much better than expected.

So what: While Strayer's profit fell in the first quarter, a surprising 12% increase in new student enrollment -- versus Wall Street's estimate of a 6% decline -- is triggering hopes of a prolonged turnaround. In fact, the jump in new sign-ups comes after six straight quarters of decline, suggesting that the tailwinds facing the sector are finally starting to ease.

Now what: Don't expect the momentum to wane anytime soon. Based on the solid enrollments for the spring term, management now sees second-quarter EPS of $1.84 to $1.86, largely in line with Wall Street estimates. The regulatory uncertainty surrounding the sector is still too much for this Fool to stomach, but for less-risk-averse bargain hunters, Strayer might be worth considering.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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