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Stride (LRN)
NYSE:LRN
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Stride
(NYSE:LRN)
Rating:77Outperform
Price Target:
$156.00
▲(20.73%Upside)
Positive Factors
Enrollment Growth
Average total enrollment increased 21.1% to a record 240,200, above estimates and consensus.
Financial Performance
Stride, Inc. reported financial results that significantly topped expectations and full-year guidance was again raised.
Market Position
Stride, Inc. is trading at a discount compared to its Ed Tech peers, yet it shows accelerating momentum and expanding margins.
Negative Factors
Regulatory Risks
Concerns exist regarding low visibility in forward enrollment growth due to high student churn and regulatory/political risks.
Valuation Concerns
Remain equal weight on the stock due to balanced valuation amid forward enrollment uncertainty and regulatory risks.
Stride (LRN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.69B
Dividend YieldN/A
Average Volume (3M)570.88K
Price to Earnings (P/E)20.4
Beta (1Y)0.36
Revenue Growth14.90%
EPS Growth60.56%
CountryUS
Employees7,800
SectorConsumer Defensive
Sector Strength54
IndustryEducation & Training Services
Share Statistics
EPS (TTM)2.02
Shares Outstanding43,523,254
10 Day Avg. Volume585,208
30 Day Avg. Volume570,884
Financial Highlights & Ratios
PEG Ratio1.81
Price to Book (P/B)4.13
Price to Sales (P/S)0.00
P/FCF Ratio18.59
Enterprise Value/Market Cap1.03
Enterprise Value/Revenue0.68
Enterprise Value/Gross Profit6.59
Enterprise Value/Ebitda3.30
Forecast
1Y Price Target
$165.33Price Target Upside27.95% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Stride Business Overview & Revenue Model
Company DescriptionStride, Inc. (formerly known as K12 Inc.) is an American education company that specializes in providing online and blended educational solutions for students in kindergarten through 12th grade, as well as adult learners. It operates in the education technology sector and offers a range of learning programs, including full-time virtual schools, individual online courses, and career learning programs. Stride aims to deliver personalized learning experiences through its proprietary curriculum and technology platforms, catering to diverse educational needs and preferences.
How the Company Makes MoneyStride, Inc. generates revenue primarily through its online and blended learning programs offered to public school districts, private schools, and individual families. The company earns money by partnering with state and local school districts to operate and manage full-time virtual schools, for which they receive funding based on student enrollment and participation. Additionally, Stride offers individual course sales to families who seek supplementary education resources, as well as career learning programs for adult learners, which contribute to its revenue streams. The company's growth is further supported by strategic partnerships with educational institutions and governments to expand its reach and enhance its learning platforms.
Stride Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q3-2025)
| % Change Since: -9.38%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call reflects a generally positive outlook for Stride, Inc., with significant growth in enrollment and financial performance. The company has raised its financial guidance and is experiencing strong demand for its programs. However, there are some minor challenges, such as a slight decline in revenue per enrollment and constraints on enrollment capacity. Overall, the highlights outweigh the lowlights, indicating a strong performance with a positive outlook.Q3-2025 Updates
Positive Updates
Strong Enrollment Growth
Stride finished the quarter with enrollment up over 21% from last year, driven by robust demand for full-time online programs.
Revenue and Profitability Increase
Total revenue was $630.4 million, up 17.8%, with career learning middle and high school programs growing by 33% to $223.9 million. Adjusted operating income rose by 47% to $141.7 million, while adjusted EBITDA increased by 40% to $168.3 million.
Raised Financial Guidance
Stride has raised its FY '25 revenue and adjusted operating income guidance, with expected revenue in the range of $2.370 billion to $2.385 billion and adjusted operating income between $455 million and $465 million.
Improved Gross Margins
Gross margins improved by 190 basis points to 40.6%. The company expects gross margins to improve around 200 basis points for the full year.
Positive Market Conditions
The funding environment for FY '26 is generally favorable, with less than 5% of overall revenues coming from federal resources, minimizing exposure to federal funding uncertainties.
Negative Updates
Slight Decline in Revenue Per Enrollment
Total revenue per enrollment was $2,415 compared to $2,420 last year. The company expects to finish the year down less than 1% in revenue per enrollment, primarily due to state mix impacts.
Enrollment Constraints
The company faced constraints in the number of new enrollments due to some schools closing enrollment for the school year, despite strong demand.
Challenges in Lower Grade Enrollment
While middle and high school enrollments are strong, the company identified missed opportunities in lower grades and is looking to improve engagement and enrollment in these segments.
Company Guidance
During the Stride, Incorporated Third Quarter 2025 Earnings Conference Call, guidance was notably optimistic with strong metrics indicating growth. Enrollment increased by over 21% from the previous year, and application volumes have doubled compared to two years ago and quadrupled compared to four years ago. Total revenue for Q3 was reported at $630.4 million, reflecting a 17.8% increase, with career learning programs contributing $223.9 million, up 33%. General Education revenue also rose to $370.8 million, representing a 13% increase. Average enrollments were up 14% year-over-year. The company raised its full-year fiscal 2025 revenue guidance to between $2.370 billion and $2.385 billion and adjusted operating income guidance to between $455 million and $465 million. Gross margins improved by 190 basis points year-over-year to 40.6%, with expectations for a full-year improvement of around 200 basis points. Adjusted operating income increased by 47% to $141.7 million, and adjusted EBITDA rose by 40% to $168.3 million. The company also highlighted less than a 1% expected decline in revenue per enrollment for the fiscal year.Stride Financial Statement Overview
Summary
Stride demonstrates strong financial performance with robust revenue growth, solid profitability margins, and a stable balance sheet. The company maintains a healthy cash flow, although increased debt levels require monitoring.Income Statement
Stride has demonstrated strong revenue growth with the TTM (Trailing-Twelve-Months) revenue increasing by 12% from the previous period and an overall positive trend over the past years. The company maintains a solid gross profit margin of approximately 39.1% and a net profit margin of 20.1%, indicating efficient cost management and profitability. The EBIT and EBITDA margins of 16.5% and 18.3% respectively, reflect robust operational performance. However, the net income growth rate has been outpaced by revenue growth, suggesting potential room for improvement in operational efficiencies.85
Very Positive
Balance Sheet
Stride's balance sheet shows a stable financial position with a debt-to-equity ratio of 0.40, indicating moderate leverage. The return on equity (ROE) stands at 32.5%, reflecting effective utilization of shareholder funds to generate profit. The equity ratio of 64.2% highlights a strong equity base relative to total assets. However, the increase in total debt from previous years warrants careful monitoring to ensure financial stability.78
Positive
Cash Flow
The cash flow analysis for Stride reveals a healthy operating cash flow to net income ratio of 0.67, suggesting that cash generation from operations is in line with reported earnings. The free cash flow has seen a significant growth rate of 46% over the previous period, aligning well with the revenue growth trajectory. The free cash flow to net income ratio of 0.69 further emphasizes the company's ability to convert earnings into cash. Nonetheless, cash flow from investing activities remains negative, indicating ongoing investments that may impact short-term liquidity.82
Very Positive
| Breakdown | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.04B | 1.84B | 1.69B | 1.54B | 1.04B |
| Gross Profit | 763.60M | 647.07M | 596.48M | 534.90M | 347.53M |
| EBITDA | 382.18M | 291.31M | 269.27M | 228.63M | 104.55M |
| Net Income | 204.18M | 126.87M | 107.13M | 71.45M | 24.51M |
Balance Sheet | |||||
| Total Assets | 1.92B | 1.76B | 1.64B | 1.58B | 1.07B |
| Cash, Cash Equivalents and Short-Term Investments | 692.29M | 410.81M | 389.40M | 386.08M | 212.30M |
| Total Debt | 528.21M | 543.81M | 565.67M | 466.28M | 235.17M |
| Total Liabilities | 744.44M | 813.37M | 830.96M | 772.65M | 397.93M |
| Stockholders Equity | 1.18B | 947.30M | 812.58M | 804.65M | 675.33M |
Cash Flow | |||||
| Free Cash Flow | 217.21M | 136.60M | 139.26M | 81.89M | 35.42M |
| Operating Cash Flow | 278.80M | 203.15M | 206.88M | 134.15M | 80.42M |
| Investing Cash Flow | -139.87M | -118.24M | -110.76M | -165.44M | -217.37M |
| Financing Cash Flow | -49.12M | -63.50M | -93.31M | 204.58M | 65.63M |
Stride Technical Analysis
Negative
129.21
Price Trends
143.55
Negative
139.04
Negative
123.40
Positive
Market Momentum
-3.64
Positive
29.15
Positive
19.01
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LRN, the sentiment is Negative. The current price of 129.21 is below the 20-day moving average (MA) of 136.16, below the 50-day MA of 143.55, and above the 200-day MA of 123.40, indicating a neutral trend. The MACD of -3.64 indicates Positive momentum. The RSI at 29.15 is Positive, neither overbought nor oversold. The STOCH value of 19.01 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LRN.
Stride Risk Analysis
Stride disclosed 45 risk factors in its most recent earnings report. Stride reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Stride Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $4.83B | 21.38 | 29.85% | ― | 6.31% | 11.24% | |
77 Outperform | $5.69B | 20.41 | 23.76% | ― | 14.90% | 60.56% | |
76 Outperform | $4.12B | 19.01 | 16.62% | ― | 13.10% | 127.72% | |
73 Outperform | $7.74B | 19.19 | 10.36% | 1.27% | 18.73% | 26.72% | |
69 Neutral | $5.97B | 71.47 | 2.28% | ― | 50.98% | ― | |
68 Neutral | $3.42B | 12.26 | 31.14% | ― | 1.26% | 140.30% | |
65 Neutral | $27.20B | 15.73 | -4.29% | 2.57% | 1.03% | 4.90% |
* Consumer Defensive Sector Average
Performance Comparison
LRN
Stride
129.21
55.85
76.13%
ATGE
Adtalem Global Education
114.30
35.49
45.03%
LOPE
Grand Canyon Education
168.69
14.89
9.68%
EDU
New Oriental Education Tech
45.52
-27.18
-37.39%
TAL
TAL Education Group
9.82
-0.92
-8.57%
LAUR
Laureate Education
23.01
8.53
58.91%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.