Stride vs. Strategic Education: Which Education Stock to Bet on Now?

Core Insights - The education market is experiencing a shift towards online education alternatives, particularly for career learning, benefiting companies like Stride, Inc. and Strategic Education, Inc. [1] Group 1: Company Overview - Stride, Inc. focuses on K-12 virtual schooling and career-learning programs primarily in the United States [2] - Strategic Education offers post-secondary education and academic programs, including business administration, IT, and nursing, through both physical campuses and online platforms [2] Group 2: Market Trends and Regulatory Developments - The U.S. Department of Education's formation of the Accreditation, Innovation and Modernization (AIM) committee aims to reform higher education accreditation, promoting high-quality, data-driven programs and reducing bureaucratic barriers [3] - This initiative is expected to enhance workforce skills and increase demand for services from education providers like Stride and Strategic Education [3] Group 3: Stride, Inc. Performance - Stride is benefiting from a sustained shift towards virtual education, with high parental dissatisfaction with traditional K-12 education driving enrollment towards online options [5] - The Career Learning segment has seen enrollments increase by 18.1% year-over-year to 111,100 students, with revenues growing by 20.5% to $547.6 million in the first half of fiscal 2026 [6] - Stride's adjusted operating income and adjusted EBITDA grew by 23.8% and 21.3% year-over-year, respectively, with a revised full-year revenue guidance indicating confidence in execution [7] - The company has authorized a stock repurchase program of up to $500 million, reflecting management's confidence in long-term value creation [8] Group 4: Strategic Education Performance - Strategic Education's employer-affiliated enrollment reached 32.7% of the U.S. Higher Education segment, up from 29.8% year-over-year, indicating robust growth driven by employer partnerships [11] - The Education Technology Services segment's revenues grew by 46.8% year-over-year, supported by new employer partnerships and increased subscriptions [11] - Innovations like FlexPath and programs such as Workforce Edge and RightSkill are contributing to Strategic Education's growth and aligning with workforce upskilling trends [12][13] Group 5: Financial Metrics and Valuation - Stride's trailing 12-month Return on Equity (ROE) is 26.2%, significantly higher than Strategic Education's average, indicating better efficiency in generating shareholder returns [22] - Stride's earnings estimates for fiscal 2026 and 2027 have improved by 3.7% and 9.2%, respectively, while Strategic Education's estimates have remained unchanged [20][22] - Stride's stock offers a discounted valuation with stronger growth potential, while Strategic Education presents a steadier growth trajectory but at a premium valuation [19][26]