GICS Sector : Consumer Defensive
Stride, Inc., a technology-based education service company, provides proprietary and third-party online curriculum, software systems, and educational services to facilitate individualized learning for students primarily in kindergarten through 12th grade (K-12) in the United States and internationally.Its technology-based products and services enable clients to attract, enroll, educate, track progress, and support students.The company offers integrated package of systems, services, products, and professional expertise to support a virtual or blended public school; individual online courses and supplemental educational products; and products and services for the general education market focused on subjects, including math, English, science, and history for kindergarten through twelfth grade students.
Stride's financial performance in the second quarter of fiscal year 2026 demonstrated resilience, with revenue reaching $631.3 million, an 8% increase from the same period last year. Adjusted operating income rose 17% to $159 million, and adjusted EPS came in at $2.50, beating estimates of $2.33. The company's adjusted EBITDA also saw a 17% increase to $188.1 million. The strong financial performance was driven by continued demand for its products, particularly in the Career Learning segment, where revenue grew 29% to $275.6 million, fueled by 17.6% year-over-year enrollment growth.
Publication Date: Feb -08
The company's total enrollments for the second quarter were 248,500, up 7.8% from last year. The growth in enrollments was a key driver of the revenue increase, and the company was able to backfill losses due to strong demand. As James Rhyu, CEO, noted, "We've had conversations with families who are experiencing issues, and they're resilient and willing to grit through the challenges because they need our alternative programs."
Stride affirmed its full-year revenue guidance of $2.480 billion to $2.555 billion and raised its adjusted operating income guidance to between $485 million and $505 million. The company's capital expenditures are expected to be between $70 million and $80 million, unchanged from previous guidance. Analysts estimate next year's revenue growth at 5.2%, indicating a continued positive trajectory for the company.
With a P/E Ratio of 11.9 and an EV/EBITDA of 7.17, Stride's valuation appears reasonable, especially considering its strong financial performance and growth prospects. The company's ROE of 21.36% and ROIC of 14.41% also indicate a high level of profitability. The Free Cash Flow Yield of 5.44% is attractive, suggesting that the company has sufficient cash flow to invest in growth initiatives or return value to shareholders.
Stride's adjusted operating income margin expanded due to efficiency drives and a one-time benefit from a long-term agreement adjustment, which benefited gross margin by 200 basis points. The company's disciplined cost management and right-sizing of its adult business also contributed to the margin expansion. As the company continues to focus on maintaining stability and driving growth, its margin profile is likely to remain a key area of focus.
Stride's Platform Fixes Progress: Is Execution Risk Finally Behind It?
Feb -10
Reviewing China Bilingual Technology & Education Group (OTCMKTS:CATG) and Stride (NYSE:LRN)
Feb -10
Berger Montague PC Investigates Stride, Inc.'s Board of Directors for Breach of Fiduciary Duty (NYSE: LRN)
Feb -09
Amkor Technology (NASDAQ:AMKR) Shares Acquired Sen. Markwayne Mullin
Feb -05
Sen. Markwayne Mullin Buys McKesson Corporation (NYSE:MCK) Stock
Feb -05
Sen. Markwayne Mullin Buys FirstCash Holdings, Inc. (NASDAQ:FCFS) Stock
Feb -05
Sen. Markwayne Mullin Purchases Shares of Carpenter Technology Corporation (NYSE:CRS)
Feb -05
Sen. Markwayne Mullin Buys Citigroup Inc. (NYSE:C) Shares
Feb -05
Stride's General Education segment growth is driven by increasing demand for online and blended learning, strategic partnerships with schools and districts, and expansion of product offerings. Additionally, the company's focus on personalized learning, teacher support, and student outcomes has led to strong customer retention and acquisition, contributing to an 8% growth rate.
Stride's Career Learning - Middle - High School segment growth is driven by increasing demand for online education, rising adoption of personalized learning, and growing need for career readiness. Additionally, Stride's strong brand reputation, expanding partnerships with schools and districts, and investments in technology and content development contribute to its 9% growth.
Stride's Career Learning - Adult segment growth is driven by increasing demand for online education, rising need for skill enhancement, and growing adoption of online learning platforms. Additionally, the segment benefits from Stride's strong brand recognition, strategic partnerships, and expanding course offerings, leading to a 10% growth rate.
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Stride, Inc. faces moderate threat from substitutes due to the availability of alternative fitness options such as jogging, yoga, and other forms of exercise.
Customers have high bargaining power due to the availability of multiple fitness options, making it easy for them to switch to competitors.
Stride, Inc. has a strong bargaining power over its suppliers due to its large market share and ability to negotiate better prices.
The threat of new entrants is moderate due to the high capital requirements and regulatory barriers to entry in the fitness industry.
The fitness industry is highly competitive, with many established players and new entrants, leading to a high intensity of rivalry.
| Value | |
|---|---|
| Debt Weight | 36.47% |
| Debt Cost | 3.95% |
| Equity Weight | 63.53% |
| Equity Cost | 5.28% |
| WACC | 4.79% |
| Leverage | 57.41% |
Value: 7.6
Growth: 7.3
Quality: 6.5
Yield: 2.0
Momentum: 8.0
Volatility: 7.7
1-Year Total Return ->
Value: 2.9
Growth: 5.6
Quality: 6.0
Yield: 5.0
Momentum: 10.0
Volatility: 7.7
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Value: 6.3
Growth: 4.0
Quality: 6.2
Yield: 6.0
Momentum: 2.0
Volatility: 7.3
1-Year Total Return ->
Value: 5.7
Growth: 7.4
Quality: 7.4
Yield: 0.0
Momentum: 7.0
Volatility: 4.0
1-Year Total Return ->
Value: 3.1
Growth: 6.7
Quality: 8.1
Yield: 0.0
Momentum: 5.5
Volatility: 7.7
1-Year Total Return ->
Value: 7.7
Growth: 8.3
Quality: 7.4
Yield: 0.0
Momentum: 0.5
Volatility: 2.0
1-Year Total Return ->