What Happened?
A number of stocks fell in the afternoon session after a confluence of negative economic data pointed to a weak economy.
The latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations rose, while their outlook on the labor market deteriorated. Consumers expressed greater concern about potential job losses and expected lower earnings growth, factors that directly impact discretionary spending. Adding to the unease, Chief Economist at Moody’s Analytics, Mark Zandi, warned that 22 states demonstrated clear signs of a recession, placing the broader U.S. economy in a precarious position. The U.S. government shutdown further dampened sentiment, threatening to weigh on incomes and purchasing power.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Broadcasting company Paramount (NASDAQ: PSKY) fell 3.2%. Is now the time to buy Paramount? Access our full analysis report here, it’s free for active Edge members.
- Casino Operator company Caesars Entertainment (NASDAQ: CZR) fell 4.2%. Is now the time to buy Caesars Entertainment? Access our full analysis report here, it’s free for active Edge members.
- Education Services company Strategic Education (NASDAQ: STRA) fell 5%. Is now the time to buy Strategic Education? Access our full analysis report here, it’s free for active Edge members.
- Travel and Vacation Providers company Target Hospitality (NASDAQ: TH) fell 4.3%. Is now the time to buy Target Hospitality? Access our full analysis report here, it’s free for active Edge members.
- Specialized Consumer Services company Frontdoor (NASDAQ: FTDR) fell 2.7%. Is now the time to buy Frontdoor? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Strategic Education (STRA)
Strategic Education’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 17.6% on the news that the company reported weak fourth-quarter results, with domestic student numbers falling short of expectations. Revenue for the quarter grew modestly by 2.9% year-on-year, but operating income declined significantly compared to the same period last year. On the other hand, Strategic Education beat analysts' EPS and EBITDA expectations this quarter. Zooming out, we think this was a mixed yet weaker quarter.
Strategic Education is down 12.9% since the beginning of the year, and at $80.49 per share, it is trading 22.2% below its 52-week high of $103.46 from February 2025. Investors who bought $1,000 worth of Strategic Education’s shares 5 years ago would now be looking at an investment worth $856.31.
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