Strayer Education (NASDAQ: STRA) and Bridgepoint Education (NYSE:BPI) are both small-cap general education services companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Strayer Education 5.74% 11.76% 7.72%
Bridgepoint Education 0.49% 12.78% 6.68%

Earnings & Valuation

This table compares Strayer Education and Bridgepoint Education’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Strayer Education $441.09 million 2.31 $34.80 million $3.50 27.26
Bridgepoint Education $527.09 million 0.54 -$30.04 million $0.14 69.65

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

Volatility and Risk

Strayer Education has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Bridgepoint Education has a beta of 2.21, indicating that its stock price is 121% more volatile than the S&P 500.

Dividends

Strayer Education pays an annual dividend of $1.00 per share and has a dividend yield of 1.0%. Bridgepoint Education does not pay a dividend. Strayer Education pays out 28.6% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Strayer Education and Bridgepoint Education, as provided by MarketBeat.

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

Strayer Education currently has a consensus price target of $101.33, indicating a potential upside of 6.20%. Bridgepoint Education has a consensus price target of $13.00, indicating a potential upside of 33.33%. Given Bridgepoint Education’s higher probable upside, analysts clearly believe Bridgepoint Education is more favorable than Strayer Education.

Institutional and Insider Ownership

97.1% of Strayer Education shares are held by institutional investors. Comparatively, 91.5% of Bridgepoint Education shares are held by institutional investors. 6.7% of Strayer Education shares are held by insiders. Comparatively, 41.5% of Bridgepoint Education shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Strayer Education beats Bridgepoint Education on 10 of the 16 factors compared between the two stocks.

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.

About Bridgepoint Education

Bridgepoint Education, Inc. (Bridgepoint) is a provider of postsecondary education services. The Company’s academic institutions include Ashford University and University of the Rockies. Bridgepoint’s institutions conduct ongoing faculty and student assessment processes, and provide a range of student services. It offers Constellation, its learning platform, Waypoint Outcomes, its assessment software, and its mobile application technology. As of December 31, 2016, its institutions offered over 1,200 courses and over 80 degree programs. Ashford University offers associate’s, bachelor’s and master’s degree programs online. Ashford University comprises four colleges: the Forbes School of Business and Technology, the College of Education, the College of Health, Human Services and Science, and the College of Liberal Arts. University of the Rockies is a graduate institution that offers master’s and doctoral degree programs in the social and behavioral sciences.

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