Career Education Corporation (NASDAQ: CECO) and Strayer Education (NASDAQ:STRA) are both small-cap consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitabiliy, valuation, risk, dividends and analyst recommendations.

Profitability

This table compares Career Education Corporation and Strayer Education’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Career Education Corporation -2.48% 6.03% 3.76%
Strayer Education 7.41% 17.27% 10.68%

Analyst Recommendations

This is a summary of current recommendations for Career Education Corporation and Strayer Education, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Career Education Corporation 0 1 1 0 2.50
Strayer Education 0 3 1 0 2.25

Career Education Corporation presently has a consensus price target of $13.00, indicating a potential upside of 46.40%. Strayer Education has a consensus price target of $82.67, indicating a potential upside of 2.23%. Given Career Education Corporation’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Career Education Corporation is more favorable than Strayer Education.

Dividends

Strayer Education pays an annual dividend of $1.00 per share and has a dividend yield of 1.2%. Career Education Corporation does not pay a dividend. Strayer Education pays out 33.2% of its earnings in the form of a dividend.

Volatility and Risk

Career Education Corporation has a beta of 2.69, suggesting that its share price is 169% more volatile than the S&P 500. Comparatively, Strayer Education has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500.

Institutional and Insider Ownership

75.8% of Career Education Corporation shares are held by institutional investors. Comparatively, 92.4% of Strayer Education shares are held by institutional investors. 4.9% of Career Education Corporation shares are held by company insiders. Comparatively, 6.7% of Strayer Education shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Career Education Corporation and Strayer Education’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Career Education Corporation $667.62 million 0.92 $55.82 million ($0.25) -35.52
Strayer Education $444.83 million 1.93 $76.79 million $3.01 26.86

Strayer Education has higher revenue, but lower earnings than Career Education Corporation. Career Education Corporation is trading at a lower price-to-earnings ratio than Strayer Education, indicating that it is currently the more affordable of the two stocks.

Summary

Strayer Education beats Career Education Corporation on 9 of the 15 factors compared between the two stocks.

About Career Education Corporation

Career Education Corporation, through its colleges, institutions and universities, offers education to students in a range of career-oriented disciplines through online, on-ground and hybrid learning programs. The Company’s American InterContinental University (AIU) and Colorado Technical University (CTU) provide degree programs through the master’s or doctoral level as well as associate and bachelor’s levels. The Company operates through four segments: CTU, AIU, Culinary Arts and Transitional Group. Its University group consists of AIU and CTU, which serve students online with career-focused degree programs. Its Career Colleges Group consists of Culinary Arts and Transitional Group segments. The Culinary Arts segment includes Le Cordon Bleu institutions in North America (LCB), which offer hands-on educational programs in the career-oriented disciplines of culinary arts and patisserie and baking in the commercial-grade kitchens of Le Cordon Bleu.

About Strayer Education

Strayer Education, Inc. is an education services holding company. The Company provides post-secondary education and other academic programs, through its subsidiaries, Strayer University (the University) and New York Code and Design Academy (NYCDA). As of December 31, 2016, the University offered undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, nursing, public administration and criminal justice at 74 physical campuses located in the Mid-Atlantic and Southern regions of the United States, and online. The University also offers an executive Master of Business Administration (MBA) online through its Jack Welch Management Institute. Its subsidiary, NYCDA, provides non-degree courses in Web and application software development, primarily at its campus in New York City. Each undergraduate degree program includes courses in oral and written communication skills, as well as mathematics.

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