As the cost of higher education piles on the in the U.S., online student services company Chegg (NYSE: CHGG), is trying to entice students with cheaper more accessible textbooks, tutoring, college admissions prep, and career services assistance. Chegg is a student-facing company, working to make sticker prices more accessible and less expensive for students through their digital platform.
The increasing expense of higher education has been a hot talking point this election season. The Bureau of Labor Statistics released a report in July that states that the cost of college tuition and other associated fees have risen 63 percent in the last decade. Consumer prices for college textbooks alone rose 88 percent.
The upcoming presidential administration change could provide Chegg, which reaches 40 million visitors annually, with a significant opportunity to capitalize on the country’s frustration with mounting student loan debt and higher education costs overall.
For the past year, Chegg has consistently outperformed earnings estimates. Analysts consider Chegg to be a growth stock. Zack’s Equity Research noted in a report earlier this year, that the Internet Software industry is seeing positive earnings revisions and that this upward movement will help Chegg.
However, share prices have gone down slightly since the company went public in 2013, amid a relatively bumpy transition from mainly print textbooks to an all digital platform. Chegg Chairman and CEO Dan Rosenweig, expressed confidence on the second quarter earnings call, that the decision to transition to an all-digital business this year, will be profitable, especially in anticipation of the new school year.
“Our strategy of putting the student first and going all digital is paying off,” Rosenweig said.
Looking ahead, Chegg executives are thinking about rolling out a tutor pooling system, which would lower tutoring costs for students, which are in high demand, yet increase profits for Chegg. Jeff Silber, analyst for BMO Capital Markets has advised investors to buy Chegg stock after the second quarter earnings release this August. Gains that remain to be seen from the all digital focus should boost profits, analysts said.