We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
LRN Stock Soars 24% in 3 Months: Should You Consider Buying it Now?
Read MoreHide Full Article
Stride, Inc.’s (LRN - Free Report) stock performance has been impressive in the past three months, with 24.1% growth against the Zacks Schools industry’s 2.7% decline. It has also outperformed the Zacks Consumer Discretionary sector’s 2.6% rise and the S&P 500’s 3.9% increase. The shares of this education company closed at $85.12 on Tuesday, close to its 52-week high of $86.06.
Image Source: Zacks Investment Research
The company seems to be banking on continued enrollment strength and increased student retention, positioning it well to achieve its 2028 financial targets. Besides these factors, an efficient capital allocation strategy paired with innovative healthcare product offerings through MedCerts is not to be missed when discussing Stride.
Although certain risks, including regulatory hurdles and higher instruction and related costs, are hanging by a thread given the market uncertainties, the aforementioned tailwinds are sailing Stride’s ship toward a possible outperformance in the near term.
Notably, LRN stock has even outperformed some other industry players in the past three months including Adtalem Global Education Inc. (ATGE - Free Report) , PowerSchool Holdings, Inc. (PWSC - Free Report) and Strategic Education, Inc. (STRA - Free Report) . During the said time frame, shares of ATGE and PWSC have rallied 17.4% and 2%, respectively, while STRA has lost 16%.
LRN Trading Above 50 & 200-Day SMA
Technical indicators suggest a continued strong performance for Stride. From the graphical representation given below, it can be observed that LRN stock is riding above both the 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in LRN’s financial health and prospects.
50 & 200-Day Moving Average
Image Source: Zacks Investment Research
Knowing the Driving Factors of LRN
MedCerts Emerging as a Growth Driver: Stride acquired MedCerts in 2020 under its Career Learning segment to boost adult learning offerings and expand market opportunities in allied healthcare. Since the acquisition, the company has been witnessing consistent growth prospects through MedCerts thanks to the latter’s innovative approach toward online career training programs in allied healthcare and information technology.
Recently MedCerts expanded its product offering by launching the Certified Nursing Assistant (CNA) eLearning program, aimed to address the ongoing healthcare staffing shortages in the market. The CNA program is expected to benefit medical providers, patients and aspiring healthcare professionals through a multi-week immersive course comprising generative and conversational Artificial Intelligence. The benefits from this acquisition are reflected in the Career Learning segment’s ongoing improvements. Notably, during fiscal 2024, revenues and enrollment from the segment increased year over year by 6.4% to $750.9 million and 10.3% to 72,700 students, respectively. (read more: LRN's MedCerts Boosts Product Offering With New CNA Program)
The following chart gives an idea about the revenue growth trend over the past 5 years, substantiating the contributions of MedCerts to the company's growth.
Image Source: Zacks Investment Research
Well-Positioned to Achieve Long-Term Targets: During the November 2023 Investor Day, Stride laid down its long-term financial targets expected to be met by fiscal 2028. The company outlined the targets after considering certain aspects, including the ongoing macroeconomic trends, investments in new products and margin improvement strategies. The fiscal year 2028 targets comprise a total revenue compound annual growth rate (“CAGR”) of 10% to mid-point, adjusted operating income CAGR of 20% to mid-point and earnings per share (EPS) CAGR of 20% to mid-point.
LRN has been witnessing sustained demand trends for full-time online options in the United States K-12 market for the past year. Given the solid enrolment trend coupled with strong retention, the company aims to seamlessly achieve its fiscal year 2028 goals.
Efficient Capital Allocation: The company engages in a disciplined approach toward capital allocation, ensuring to squeeze out the maximum benefits possible from its excess cash. The primary capital allocation priorities of the company include focusing on organic growth, developing new products and technology and synergies from mergers and acquisitions. Through its investments in academic quality and student/customer experience, technological advancements, and by leveraging the online platform across several markets/verticals, Stride strongly positions itself in the industry and shines out among its peers.
Apart from making strategic investments to grow its business, the company also engages in evaluating approaches to return cash to its stockholders. LRN’s trailing 12-month return on equity (ROE) is indicative of its growth potential. ROE for the trailing 12 months was 19.1%, significantly higher than the industry’s 5%.
Image Source: Zacks Investment Research
LRN Trading at a Discount
The company is currently trading at a discount to the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. The discounted valuation indicates that despite the recent stock price increase in the past three months, it remains an attractive option for investors looking for a suitable entry point.
Image Source: Zacks Investment Research
Estimate Revision of LRN Stock
The Zacks Consensus Estimate for LRN’s fiscal 2025 earnings has trended upward in the past 60 days. The estimated figure indicates growth of 7.7% from a year ago. Furthermore, the consensus estimate for fiscal 2026 earnings has moved up over said time frame, indicating 11.8% year-over-year growth.
Image Source: Zacks Investment Research
Should You Say Yes to LRN Stock?
As discussed above, Stride is on the right track to achieving its fiscal year 2028 targets, thanks to ongoing enrollment strength and student retention backed by various strategic investments. This improving trend and synergies from a disciplined capital allocation are reflected in the fiscal 2025 and 2026 earnings estimates. Investors must consider these tailwinds while deciding on any action taken in favor of LRN stock.
Image: Bigstock
LRN Stock Soars 24% in 3 Months: Should You Consider Buying it Now?
Stride, Inc.’s (LRN - Free Report) stock performance has been impressive in the past three months, with 24.1% growth against the Zacks Schools industry’s 2.7% decline. It has also outperformed the Zacks Consumer Discretionary sector’s 2.6% rise and the S&P 500’s 3.9% increase. The shares of this education company closed at $85.12 on Tuesday, close to its 52-week high of $86.06.
Image Source: Zacks Investment Research
The company seems to be banking on continued enrollment strength and increased student retention, positioning it well to achieve its 2028 financial targets. Besides these factors, an efficient capital allocation strategy paired with innovative healthcare product offerings through MedCerts is not to be missed when discussing Stride.
Although certain risks, including regulatory hurdles and higher instruction and related costs, are hanging by a thread given the market uncertainties, the aforementioned tailwinds are sailing Stride’s ship toward a possible outperformance in the near term.
Notably, LRN stock has even outperformed some other industry players in the past three months including Adtalem Global Education Inc. (ATGE - Free Report) , PowerSchool Holdings, Inc. (PWSC - Free Report) and Strategic Education, Inc. (STRA - Free Report) . During the said time frame, shares of ATGE and PWSC have rallied 17.4% and 2%, respectively, while STRA has lost 16%.
LRN Trading Above 50 & 200-Day SMA
Technical indicators suggest a continued strong performance for Stride. From the graphical representation given below, it can be observed that LRN stock is riding above both the 50-day simple moving average (SMA) and 200-day SMA, signaling a bullish trend. The technical strength underscores positive market sentiment and confidence in LRN’s financial health and prospects.
50 & 200-Day Moving Average
Image Source: Zacks Investment Research
Knowing the Driving Factors of LRN
MedCerts Emerging as a Growth Driver: Stride acquired MedCerts in 2020 under its Career Learning segment to boost adult learning offerings and expand market opportunities in allied healthcare. Since the acquisition, the company has been witnessing consistent growth prospects through MedCerts thanks to the latter’s innovative approach toward online career training programs in allied healthcare and information technology.
Recently MedCerts expanded its product offering by launching the Certified Nursing Assistant (CNA) eLearning program, aimed to address the ongoing healthcare staffing shortages in the market. The CNA program is expected to benefit medical providers, patients and aspiring healthcare professionals through a multi-week immersive course comprising generative and conversational Artificial Intelligence. The benefits from this acquisition are reflected in the Career Learning segment’s ongoing improvements. Notably, during fiscal 2024, revenues and enrollment from the segment increased year over year by 6.4% to $750.9 million and 10.3% to 72,700 students, respectively. (read more: LRN's MedCerts Boosts Product Offering With New CNA Program)
The following chart gives an idea about the revenue growth trend over the past 5 years, substantiating the contributions of MedCerts to the company's growth.
Image Source: Zacks Investment Research
Well-Positioned to Achieve Long-Term Targets: During the November 2023 Investor Day, Stride laid down its long-term financial targets expected to be met by fiscal 2028. The company outlined the targets after considering certain aspects, including the ongoing macroeconomic trends, investments in new products and margin improvement strategies. The fiscal year 2028 targets comprise a total revenue compound annual growth rate (“CAGR”) of 10% to mid-point, adjusted operating income CAGR of 20% to mid-point and earnings per share (EPS) CAGR of 20% to mid-point.
LRN has been witnessing sustained demand trends for full-time online options in the United States K-12 market for the past year. Given the solid enrolment trend coupled with strong retention, the company aims to seamlessly achieve its fiscal year 2028 goals.
Efficient Capital Allocation: The company engages in a disciplined approach toward capital allocation, ensuring to squeeze out the maximum benefits possible from its excess cash. The primary capital allocation priorities of the company include focusing on organic growth, developing new products and technology and synergies from mergers and acquisitions. Through its investments in academic quality and student/customer experience, technological advancements, and by leveraging the online platform across several markets/verticals, Stride strongly positions itself in the industry and shines out among its peers.
Apart from making strategic investments to grow its business, the company also engages in evaluating approaches to return cash to its stockholders. LRN’s trailing 12-month return on equity (ROE) is indicative of its growth potential. ROE for the trailing 12 months was 19.1%, significantly higher than the industry’s 5%.
Image Source: Zacks Investment Research
LRN Trading at a Discount
The company is currently trading at a discount to the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. The discounted valuation indicates that despite the recent stock price increase in the past three months, it remains an attractive option for investors looking for a suitable entry point.
Image Source: Zacks Investment Research
Estimate Revision of LRN Stock
The Zacks Consensus Estimate for LRN’s fiscal 2025 earnings has trended upward in the past 60 days. The estimated figure indicates growth of 7.7% from a year ago. Furthermore, the consensus estimate for fiscal 2026 earnings has moved up over said time frame, indicating 11.8% year-over-year growth.
Image Source: Zacks Investment Research
Should You Say Yes to LRN Stock?
As discussed above, Stride is on the right track to achieving its fiscal year 2028 targets, thanks to ongoing enrollment strength and student retention backed by various strategic investments. This improving trend and synergies from a disciplined capital allocation are reflected in the fiscal 2025 and 2026 earnings estimates. Investors must consider these tailwinds while deciding on any action taken in favor of LRN stock.
Based on the overall discussion and the favorable trends of technical indicators, investors can consider adding this Zacks Rank #2 (Buy) stock to their portfolio for now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.