Strayer Education Inc. (STRA, Financial) filed Annual Report for the period ended 2011-12-31.
Strayer Educ has a market cap of $1.32 billion; its shares were traded at around $112.01 with a P/E ratio of 12.5 and P/S ratio of 2.1. The dividend yield of Strayer Educ stocks is 3.6%. Strayer Educ had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Strayer Educ the business predictability rank of 4.5-star.
We record tuition receivable and unearned tuition for our students upon the start of the academic term. Because the Universitys academic quarters coincide with the calendar quarters, at the end of the fiscal quarter (and academic term), tuition receivable represents amounts due from students for educational services already provided and unearned tuition represents advance payments from students for academic services to be provided in the future. Based upon past experience and judgment, the University establishes an allowance for doubtful accounts with respect to accounts receivable not included in unearned tuition. Any uncollected account more than six months past due is charged against the allowance. Our bad debt expense as a percentage of revenues for the years ended December 31, 2009, 2010, and 2011 was 4.1%, 3.8% and 4.0%, respectively.
Management believes that the following critical accounting policies are its more significant judgments and estimates used in the preparation of its consolidated financial statements. Tuition revenue is recognized as income, net of any refunds or withdrawals, in the respective quarter of instruction. Advance registrations for the next quarter are recorded as unearned tuition at the start of each academic term. Any cash received prior to the start of an academic term is recorded as unearned tuition. We record estimates for our allowance for uncollectible accounts for tuition receivable from students. If the financial condition of our students were to deteriorate, resulting in impairment of their ability to make required payments for tuition payable to us, additional allowances may be required. We record estimates for certain of our accrued expenses and income tax liabilities. We estimate the useful lives of our property and equipment. We periodically assess goodwill and intangible assets for impairment. We assess the value of our interest rate swap arrangement every quarter. We periodically review our assumed forfeiture rates for stock-based awards and adjust them as necessary. Should actual results differ from our estimates, revisions to our accrued expenses, carrying amount of goodwill and intangible assets, stock-based compensation expense, and income tax liabilities may be required.
In 2011, we generated $627.4 million in revenue, a 1% decrease compared to 2010, primarily as a result of a decline in average enrollment of 4%, offset in part by a 5% tuition increase which commenced in January 2011. Income from operations was $179.1 million in 2011, a decrease of 17% compared to 2010. Net income in 2011 was $106 million, a decrease of 19% compared to 2010. Earnings per diluted share was $8.88 in 2011 compared to $9.70 in 2010, a decrease of 8%, reflecting the lower share count due to share repurchases.
In 2011, bad debt expense as a percentage of revenue was 4.0% compared to 3.8% for the same period in 2010. Days sales outstanding was 15 days at the end of the fourth quarter 2011 compared to 12 days at the end of the fourth quarter 2010.
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Strayer Educ has a market cap of $1.32 billion; its shares were traded at around $112.01 with a P/E ratio of 12.5 and P/S ratio of 2.1. The dividend yield of Strayer Educ stocks is 3.6%. Strayer Educ had an annual average earning growth of 14.7% over the past 10 years. GuruFocus rated Strayer Educ the business predictability rank of 4.5-star.
Highlight of Business Operations:
Our business is subject to seasonal fluctuations, which cause our operating results to fluctuate from quarter to quarter. This fluctuation may result in volatility or have an adverse effect on the market price of our common stock. We experience, and expect to continue to experience, seasonal fluctuations in our revenue. Historically, our quarterly revenues and income have been lowest in the third quarter (July through September) because fewer students are enrolled during the summer months. We also incur significant expenses in preparing for our peak enrollment in the fourth quarter (October through December), including investing in online and campus infrastructure necessary to support increased usage. These investments result in fluctuations in our operating results which could result in volatility or have an adverse effect on the market price of our common stock. In addition, the online education market is a rapidly evolving market, and we may not be able to forecast accurately future enrollment growth and revenues.We record tuition receivable and unearned tuition for our students upon the start of the academic term. Because the Universitys academic quarters coincide with the calendar quarters, at the end of the fiscal quarter (and academic term), tuition receivable represents amounts due from students for educational services already provided and unearned tuition represents advance payments from students for academic services to be provided in the future. Based upon past experience and judgment, the University establishes an allowance for doubtful accounts with respect to accounts receivable not included in unearned tuition. Any uncollected account more than six months past due is charged against the allowance. Our bad debt expense as a percentage of revenues for the years ended December 31, 2009, 2010, and 2011 was 4.1%, 3.8% and 4.0%, respectively.
Management believes that the following critical accounting policies are its more significant judgments and estimates used in the preparation of its consolidated financial statements. Tuition revenue is recognized as income, net of any refunds or withdrawals, in the respective quarter of instruction. Advance registrations for the next quarter are recorded as unearned tuition at the start of each academic term. Any cash received prior to the start of an academic term is recorded as unearned tuition. We record estimates for our allowance for uncollectible accounts for tuition receivable from students. If the financial condition of our students were to deteriorate, resulting in impairment of their ability to make required payments for tuition payable to us, additional allowances may be required. We record estimates for certain of our accrued expenses and income tax liabilities. We estimate the useful lives of our property and equipment. We periodically assess goodwill and intangible assets for impairment. We assess the value of our interest rate swap arrangement every quarter. We periodically review our assumed forfeiture rates for stock-based awards and adjust them as necessary. Should actual results differ from our estimates, revisions to our accrued expenses, carrying amount of goodwill and intangible assets, stock-based compensation expense, and income tax liabilities may be required.
In 2011, we generated $627.4 million in revenue, a 1% decrease compared to 2010, primarily as a result of a decline in average enrollment of 4%, offset in part by a 5% tuition increase which commenced in January 2011. Income from operations was $179.1 million in 2011, a decrease of 17% compared to 2010. Net income in 2011 was $106 million, a decrease of 19% compared to 2010. Earnings per diluted share was $8.88 in 2011 compared to $9.70 in 2010, a decrease of 8%, reflecting the lower share count due to share repurchases.
In 2011, bad debt expense as a percentage of revenue was 4.0% compared to 3.8% for the same period in 2010. Days sales outstanding was 15 days at the end of the fourth quarter 2011 compared to 12 days at the end of the fourth quarter 2010.
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