Stride, Inc. (LRN) Company Overview & Stock Price Forecast
This article provides a brief analysis and stock rating for Stride, Inc. (LRN) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.
Stride, Inc. Fundamentals
Stock Price Target: $44.29
In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Stride, Inc. in comparison to the Education industry and the S&P 500.
Stride, Inc. is a Small Cap company with a Market Cap of $1.39B.
How are investors using Stride earnings yield to assess the company?
The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).
The current earnings yield for Stride is 17.45%, in comparison to 3.37% for the S&P 500 and 1.48% for the 10-year treasury bond. The median earnings yield for the Education industry is 5.16%.
What does Stride Price-to-Earnings Ratio (P/E) tell investors about the company?
The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings.
Stride is currently trading at a P/E of 25. The P/E for the Education industry is 26.63 and the P/E for the S&P 500 is 29.68.
What is the current Price-to-Sales Ratio (P/S) for Stride?
The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.
Stride is currently trading at a P/S of 0.86. The P/S for the Education industry is 2.48 and the P/S for the S&P 500 is 3.22.
How does Stride Price-to-BookRatio (P/B) compare to the Education industry?
Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.
Stride P/B ratio is 1.64. The P/B for the Education industry is 2.92 and the P/B for the S&P 500 is 4.86.
How attractive is Stride Return on Invested Capital (ROIC) to investors?
Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.
Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.
Stride ROIC is currently 4.45% in comparison to 9.86% for the Education industry and 8.60% for the S&P 500.
What is Stride YTD Performance in comparison to its industry and the total market?
The year-to-date (YTD) performance is the amount of profit/loss realized by a stock since the first trading day of the current calendar year.
The YTD performance for Stride is 49.08%. The Education industry has a YTD performance of -50.63% in comparison to the YTD S&P 500 performance of 23.93%.
Recent Financial Results (Q1, 2022)
- Revenue of $400.2M, compared to $371M in previous years quarter, driven by improved revenue per enrollment, strong middle and high school Career Learning enrollments, and growth in Adult Learning
- Loss from operations of $7M, compared to income from operations of $12.1M in previous years quarter
- Net loss of $5.9M, compared with net income of $12.7M in previous years quarter
- Diluted net loss per share of $0.15, compared with diluted net income per share of $0.30 in previous years quarter
- Adjusted operating income of $4.5M, compared with $23M
- Adjusted EBITDA of $25.5M, compared with $39.2M in previous years quarter
Stock Price Target: $44.29
Stride is a technology-based education company that 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 US and internationally.
Stride provides career learning products and services that are focused on developing skills to enter in industries, including information technology, health care and medical fields to adult learners under Galvanize, Tech Elevator, and MedCerts brand names, as well as provides staffing and talent development services to employers. Stride serves consumers, employers, and government agencies.
The company was formerly known as K12 Inc. and changed its name to Stride, Inc. in December 2020. Stride was founded in 2000 and is headquartered in Herndon, Virginia. The current CEO is Nathaniel Davis.
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This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.