- The Washington Times - Monday, August 20, 2001

A new management team means a new direction for Strayer Education Inc.'s stock.
The company's new management team includes a former businessman and a former vice chancellor of a state university system. Analysts say their combined work backgrounds and the aggressive growth plan they implemented helped the stock pick up momentum.
"When Strayer's former president and chief executive officer bought the school in 1989, it was a three-school chain," says Mark Farano, an analyst with First Analysis Securities in Chicago. "When he retired in June, he brought it up to a 14-school chain."
Mr. Farano says Strayer Education's new plans are to open three new schools per year.
Strayer Education Inc. is the D.C. holding company for Strayer University and Education Loan Processing. The university offers college courses in Maryland, Virginia and the District, while the loan program offers Strayer students financial aid in the form of low-interest loans. The company also offers its classes via the Internet.
The stock was trading as low as $17.50 on Oct. 2, but flew up to $54.70 on July 26. The stock closed at $51.30 on the Nasdaq on Friday.
Strayer's revenues for the second quarter ended June 30 increased 17 percent to $23.8 million from $20.3 million for the like quarter the year before. Net income increased 13 percent to $14.4 million (95 cents per diluted share) from $12.7 million (82 cents) for the like quarter the year before. Diluted shares reflect the value of options, warrants and other securities convertible into common stock.
"In investors' eyes, the company's benefiting from being part of a regulated industry," Mr. Odening says. When schools are first formed, they cannot immediately use federal aid loan programs to attract students, he says. "They may have lost money in that time. That's why colleges don't start up on every street corner."
Mr. Odening predicts the company will grow at a rate of 13 to 15 percent, and expects the company to "modestly" boost its tuition rate by 3 percent. In five years, he predicts earnings will be up between 20 and 25 percent.
"Anything can happen. A school could not open on time, there could be a lot of regulation scrutiny, but I think the future is really bright," he says.
Strayer Education's new president and chief executive, Robert Silberman, is the former president and chief operating officer of CalEnergy Co. Inc. He also was the former assistant to the chairman and chief executive officer of International Paper Co. Scott Steffey, the company's new chief operating officer, is the former vice chancellor of the State University of New York system. Both were named to their positions in the company back in March.
"Strayer's put together a good and necessary blend of academically steeped managers and financially savvy businessmen," says Gerald Odening, an analyst with J.P. Morgan in Manhattan. "Rob Silberman looks at Strayer the way GE manages its business."
Strayer also benefits from fulfilling a need many Americans have: to complete their undergraduate education, Mr. Farano says. He says about 25 million people in the United States fall into the category of not having finished college, and businesses like Strayer Education can profit from that.
"There's lots of people to be served," he says.


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