Why Strayer Education Failed Investors Today

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 Strayer Education dropped 12% after the company released earnings.

So what: Revenue fell 10% in the second quarter, to $132.0 million, and net income fell 29%, to $15.0 million, or $1.42 per share. Both figures were better than estimates, but the trend of lower enrollment and revenue has investors selling shares today. 

Now what: The most concerning data point is that enrollment was down 13% for the summer term for Strayer. New student enrollment was down a whopping 17%, which doesn't bode well for earnings going forward. Momentum is clearly against the company, and even though shares trade at 12.5 times forward earnings estimates, this stock looks like a value trap to me.

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The article Why Strayer Education Failed Investors Today originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks 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 Motley Fool has a disclosure policy.

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