Should You Buy, Hold or Sell Stride Stock Ahead of Q2 Earnings?

Stride, Inc. LRN is slated to report its second-quarter fiscal 2025 results on Jan. 28, after market close.See the Zacks Earnings Calendar to stay ahead of market-making news.In the first quarter of 2025, LRN reported better-than-expected results, with earnings per share (EPS) and revenues topping the Zacks Consensus Estimate by 370% and 10.3%, respectively. Both metrics also grew year over year by 754.5% and 14.8%, respectively. The results reflected increased contributions from the Career Learning and General Education programs, driven by rising enrollments and a favorable school mix.The company has a noteworthy earnings surprise history, having surpassed expectations in each of the trailing four quarters. The average surprise over this period is 100.8%, as observed in the chart below.EPS TrendImage Source: Zacks Investment ResearchStride’s Trend in Estimate RevisionThe Zacks Consensus Estimate for the second-quarter EPS has remained unchanged at $1.97 over the past 60 days. The estimated figure indicates 27.9% growth from the year-ago EPS of $1.54.Image Source: Zacks Investment ResearchThe consensus mark for revenues is pegged at $571.8 million, indicating 13.3% year-over-year growth.What Our Model Unveils for LRNOur proven model does not conclusively predict an earnings beat for Stride this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.Earnings ESP: LRN has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: The company currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Likely to Define Stride’s Quarterly ResultsThe company’s top-line performance is expected to have been driven by the demand strength for its virtual and blended educational programs, reflected in the enrollment growth trends. Furthermore, the optimism surrounding the U.S. education market regarding the regulatory reforms to be undertaken under President Trump’s administration is also likely to have added to the uptick.For the upcoming quarter, Stride expects revenues to range between $560 million and $580 million, up from $504.9 million reported in the year-ago quarter. Notably, the company’s continuous strategic efforts, including purchasing of property and equipment, capitalizing on advanced software and focusing on curriculum development along with a favorable school mix (distribution of enrollments by school), are likely to have encouraged the uptrend.Meanwhile, the bottom line of LRN is expected to have increased year over year on the back of declining selling, general and administrative expenses accompanied by the leverage from increased revenues. The company’s ongoing cost-reduction efforts and efficient capital allocation strategy are supporting the margins amid an inflationary market backdrop.Stride expects adjusted operating income to be between $115 million and $125 million, notably up from $94.9 million reported last year.Price Performance & Valuation of LRN StockShares of Stride have showcased an upward trend in the past six months. The stock has surged 65.7% in the said time frame against the Zacks Schools industry’s 3.6% decline. The company also performed notably better than a few of the primary industry players, including Universal Technical Institute, Inc. UTI, Adtalem Global Education Inc. ATGE and American Public Education, Inc. APEI in the same time bracket as shown below.Image Source: Zacks Investment ResearchRegarding the value LRN stock offers to investors, it is currently trading at a premium compared with the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis.Image Source: Zacks Investment ResearchWhat are the Thoughts on Investment?Through various strategic business initiatives, Stride is consistently working on diversifying its product offerings through its reportable education programs. Along with ensuring diversified offerings, it is also working on ways to manage its costs and keep its margins in check, given the persisting inflation environment. With a favorable education industry scenario in the country, these company-specific efforts are expected to boost LRN’s growth trends in the upcoming quarter and further.Although the premium valuation of the stock is clouding investors’ judgment regarding necessary actions to be taken in its favor, the year-over-year growth trend across the earnings and revenue estimates is encouraging for its prospects. The trends are a reflection of the company’s efforts in expanding its bottom line and the strength in enrollment across its program offerings.Based on the overall discussion, it is advised that investors holding LRN stock must retain their positions while prospective investors should wait for a more favorable entry point.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Public Education, Inc. (APEI): Free Stock Analysis Report Universal Technical Institute Inc (UTI): Free Stock Analysis Report Stride, Inc. (LRN): Free Stock Analysis Report Adtalem Global Education Inc. (ATGE): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks