Strayer Tumbles After Suspending Quarterly Dividend
Strayer Education Inc. (STRA), a for-profit college chain with 97 campuses, fell the most in almost two years after forecasting profit that fell short of analysts’ estimates and suspending its $1-a-share quarterly dividend.
Profit will be $1.43 to $1.45 a share in the current quarter, and $5.40 to $5.60 in 2013, Herndon, Virginia-based Strayer said today in a statement. That compares with analysts’ average estimates of $1.56 for the quarter and $5.57 for next year, according to data compiled by Bloomberg.
For-profit colleges are reporting declining enrollment as students are reluctant to take on debt in a sluggish economy. The schools’ marketing practices, job placement and student-loan defaults have also been under scrutiny by Congress, the U.S. Education Department and federal prosecutors, and they face more competition from traditional colleges.
“We believe the postsecondary market is increasingly crowded, commoditized and competitive,” Peter Appert, an analyst with Piper Jaffray & Co., wrote in a note to investors. He rates the stock “underweight.”
Strayer fell 17 percent to $46.51 at the close in New York, the most since January 2011 and is at its lowest level in almost 11 years. A Bloomberg index of 13 for-profit education stocks dropped 2.5 percent.
Last month, Phoenix-based Apollo Group Inc. (APOL), the largest chain and the operator of University of Phoenix, also said it was closing campuses and cutting jobs.
To contact the reporter on this story: John Hechinger in Boston at firstname.lastname@example.org
To contact the editor responsible for this story: Lisa Wolfson at email@example.com