Strayer Education (NASDAQ: STRA) and American Public Education (NASDAQ:APEI) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, earnings, risk, analyst recommendations, valuation and institutional ownership.

Institutional & Insider Ownership

93.0% of Strayer Education shares are owned by institutional investors. Comparatively, 92.0% of American Public Education shares are owned by institutional investors. 6.7% of Strayer Education shares are owned by insiders. Comparatively, 3.6% of American Public Education shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Strayer Education 7.90% 17.65% 11.15%
American Public Education 5.18% 7.87% 6.55%

Dividends

Strayer Education pays an annual dividend of $1.00 per share and has a dividend yield of 1.2%. American Public Education does not pay a dividend. Strayer Education pays out 31.2% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current recommendations and price targets for Strayer Education and American Public Education, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Strayer Education 0 2 1 0 2.33
American Public Education 0 1 0 0 2.00

Strayer Education currently has a consensus price target of $94.00, indicating a potential upside of 11.86%. American Public Education has a consensus price target of $19.00, indicating a potential downside of 7.09%. Given Strayer Education’s stronger consensus rating and higher probable upside, analysts plainly believe Strayer Education is more favorable than American Public Education.

Valuation and Earnings

This table compares Strayer Education and American Public Education’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Strayer Education $449.07 million 2.00 $77.90 million $3.21 26.18
American Public Education $300.31 million 1.11 $56.56 million $0.95 21.53

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

Risk and Volatility

Strayer Education has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500. Comparatively, American Public Education has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500.

Summary

Strayer Education beats American Public Education on 14 of the 16 factors compared between the two stocks.

Strayer Education Company Profile

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.

American Public Education Company Profile

American Public Education, Inc. provides online and on-campus postsecondary education. The Company provides postsecondary education through its subsidiary institutions, American Public University System, Inc. (APUS) and Hondros College of Nursing (HCON). It operates through two segments: American Public Education Segment, which consists of the operational activities of APUS, other corporate activities, and minority investments, and Hondros College of Nursing Segment, which consists of the operational activities of HCON. APUS provides online postsecondary education to approximately 88,700 adult learners serving the needs of the military and public safety communities as of December 31, 2016. As of December 31, 2016, HCON provided nursing education to approximately 1,300 students across five campuses in the State of Ohio, as well as online. It offers a Diploma in Practical Nursing and an Associate Degree in Nursing. As of December 31, 2016, the Company had approximately 90,000 students.

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