Stride (LRN) AI Stock Analysis

828 Followers

Top Page

Stride

(NYSE:LRN)

81Outperform

Stride, Inc. shows a robust financial performance with strong growth in revenue and profitability, supported by a solid balance sheet. The technical indicators suggest continued upward momentum, despite approaching overbought levels. Valuation is reasonable, aligning with growth expectations. The positive earnings call further enhances the outlook, contributing to a solid overall stock score.

Positive Factors

Enrollment Growth

Total enrollments grew 21% year-over-year to 240,200, including growth of 14% in general education and 34% in career learning.

Financial Performance

Stride, Inc. reported financial results that significantly topped expectations and full-year guidance was again raised.

Negative Factors

Regulatory Risks

Concerns exist regarding low visibility in forward enrollment growth due to high student churn and regulatory/political risks.

Stock Valuation

Remain equal weight on the stock due to balanced valuation amid forward enrollment uncertainty and regulatory risks.

Stride (LRN) vs. S&P 500 (SPY)

Market Cap

$6.81B

Dividend YieldN/A

Average Volume (3M)802.85K

Price to Earnings (P/E)24.4

Beta (1Y)0.44

Revenue Growth14.90%

EPS Growth60.56%

CountryUS

Employees7,800

SectorConsumer Defensive

Sector Strength79

IndustryEducation & Training Services

Share Statistics

EPS (TTM)2.02

Shares Outstanding43,523,254

10 Day Avg. Volume1,013,843

30 Day Avg. Volume802,850

Financial Highlights & Ratios

PEG Ratio2.08

Price to Book (P/B)4.76

Price to Sales (P/S)0.00

P/FCF Ratio21.42

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$159.25

Price Target Upside1.75% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Stride Business Overview & Revenue Model

Company DescriptionStride, Inc., formerly known as K12 Inc., is an American technology-based education company that provides online and blended education services. The company primarily operates in the education sector, offering a wide range of educational products and services, including online public and private schools, career learning programs, and supplemental educational tools for students from kindergarten through 12th grade. Stride is recognized for its focus on personalized learning experiences and innovative educational solutions catered to a diverse student population.

How the Company Makes MoneyStride, Inc. makes money primarily through its tuition and service fees for its online and blended educational programs. The company's revenue streams are largely derived from contracts with school districts and local educational agencies that pay for the implementation and management of virtual public schools powered by Stride's platform. Additionally, Stride generates income from its career learning programs, which provide skills training and workforce preparation to students and adult learners. The company also offers proprietary curriculum and supplemental educational resources available for purchase by schools, teachers, and parents. Significant partnerships with educational institutions and government agencies further bolster Stride's revenue by expanding its reach and credibility in the field of online education.

Stride Financial Statement Overview

Summary

Strong revenue growth and profitability margins, a solid balance sheet with manageable debt levels, and a positive cash flow trajectory position Stride well in its industry. The company shows growth potential and financial stability, with a need for continued focus on operational efficiencies.

Income Statement

Very Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Very Positive

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.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
2.29B	2.04B	1.84B	1.69B	1.54B	1.04B
	Gross Profit
893.21M	763.60M	647.07M	596.48M	534.90M	347.53M
	EBIT
376.91M	249.60M	165.50M	156.63M	110.46M	32.46M
	EBITDA
519.08M	382.18M	300.44M	269.27M	228.63M	32.46M
	Net Income Common Stockholders
299.40M	204.18M	126.87M	107.13M	71.45M	24.51M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
717.50M	692.29M	410.81M	389.40M	386.08M	212.30M
	Total Assets
2.07B	1.92B	1.76B	1.64B	1.58B	1.07B
	Total Debt
561.25M	528.21M	543.81M	565.67M	466.28M	235.17M
	Net Debt
46.20M	27.60M	133.00M	176.27M	80.20M	22.87M
	Total Liabilities
752.68M	744.44M	813.37M	830.96M	772.65M	397.93M
	Stockholders Equity
1.32B	1.18B	947.30M	812.58M	804.65M	675.33M
Cash Flow		Free Cash Flow
318.02M	217.21M	136.60M	139.26M	81.89M	35.42M
	Operating Cash Flow
306.69M	278.80M	203.15M	206.88M	134.15M	80.42M
	Investing Cash Flow
-92.20M	-139.87M	-118.24M	-110.76M	-165.44M	-217.37M
	Financing Cash Flow
-59.94M	-49.12M	-63.50M	-93.31M	204.58M	65.63M

Stride Technical Analysis

Technical Analysis Sentiment

Positive

Last Price156.51

Price Trends

50DMA

134.27

Positive

100DMA

127.84

Positive

200DMA

107.22

Positive

Market Momentum

MACD

7.29

Negative

RSI

70.87

Negative

STOCH

79.37

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LRN, the sentiment is Positive. The current price of 156.51 is above the 20-day moving average (MA) of 144.85, above the 50-day MA of 134.27, and above the 200-day MA of 107.22, indicating a bullish trend. The MACD of 7.29 indicates Negative momentum. The RSI at 70.87 is Negative, neither overbought nor oversold. The STOCH value of 79.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LRN	81 Outperform	$6.81B	24.44	23.76%	―	14.90%	60.56%
ATGE	81 Outperform	$4.20B	21.03	16.62%	―	13.10%	127.72%
LOPE	77 Outperform	$5.27B	23.97	29.85%	―	6.31%	11.24%
LAUR	74 Outperform	$3.37B	12.06	31.14%	―	1.26%	140.30%
EDU	72 Outperform	$7.90B	20.38	10.36%	―	18.73%	26.72%
TAL	72 Outperform	$5.58B	67.10	2.28%	―	55.62%	―
Sector *	64 Neutral	$8.78B	14.76	5.05%	174.28%	3.62%	3.48%

* Consumer Defensive Sector Average

Performance Comparison

LRN

Stride

156.51

85.84

121.47%

ATGE

Adtalem Global Education

136.25

71.15

109.29%

LOPE

Grand Canyon Education

196.10

49.16

33.46%

EDU

New Oriental Education Tech

47.29

-39.55

-45.54%

TAL

TAL Education Group

9.42

-4.23

-30.99%

LAUR

Laureate Education

22.88

6.74

41.76%

Stride Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q3-2025)

% Change Since: 9.76%|

Next Earnings Date:Aug 12, 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.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.