Stride Stock Soars More Than 57% in 1 Month: Still a Buy?

Stride, Inc. LRN, a leading provider of online education programs, has witnessed a meteoric rise in its stock price, surging 57.3% in the past month, outperforming the Zacks Schools industry’s 1.1% growth. The broader Consumer Discretionary sector rose 5.9% and the S&P 500 grew 1.5% in the same time frame.The company continues to experience strong demand, particularly in its Career Learning segment, contributing significantly to the overall revenue and enrollment growth. The company has been capitalizing on its focus on innovative education solutions across K-12, career learning, and adult training, emphasizing long-term growth and operational efficiency.Notably, LRN stock has even outperformed some other industry players in the past month, including Adtalem Global Education Inc. ATGE, Grand Canyon Education, Inc. LOPE and Laureate Education, Inc. LAUR. During the said time frame, shares of ATGE, LOPE and LAUR have rallied 22.4%, 22.2% and 21.2%, respectively.LRN’s One-Month Share PerformanceImage Source: Zacks Investment Research LRN Stock Trades Above 50 and 200-Day Moving AveragesTechnical indicators suggest continued strong performance for Stride. Notably, the 50-day SMA continues to read higher than the 200-day SMA, signaling the bullish trend. This technical strength underscores positive market sentiment and confidence in Stride’s financial health and prospects. Image Source: Zacks Investment Research This remarkable performance has caught the attention of investors seeking growth opportunities in the education technology space. But is Stride still a buy after this rapid ascent? Let’s dive into the factors driving its rally and assess its prospects.What’s Fueling the LRN Stock to Surge?Strong Quarterly Results: Later last month, Stride reported robust financial and operational growth for the first quarter of fiscal 2025, driven by unprecedented demand in its education programs. The company achieved revenues of $551.1 million, marking a 14.8% increase compared with the same period in fiscal 2024. Stride's earnings per share (EPS) of 94 cents saw a staggering rise from 11 cents in the prior year.The following chart gives an idea about the revenue growth trend over the past five years, substantiating unprecedented demand of its education programs. Image Source: Zacks Investment ResearchSolid Enrollment Trends; Career Learning Remains a Key: Total enrollments increased 18.5% year over year to 222.6K students in the fiscal first quarter, with Career Learning programs experiencing a remarkable 30.4% rise in enrollments. This growth was particularly pronounced in the middle-high school Career Learning segment, which saw a revenue surge of 31.7%. General Education enrollments also grew, contributing a 10% increase in revenues. Despite a decline of 23.7% in adult Career Learning enrollments, the overall Career Learning revenues increased 22.6%, reflecting the company’s ability to adapt and focus on high-performing segments. Meanwhile, revenue per enrollment increased slightly by 0.5% to $2,303 from a year ago, reflecting a more optimized revenue mix.Stride’s strategic focus on Career Learning programs has clearly paid dividends, reinforcing its position as a leader in technology-based education. By continuously evolving its offerings to meet the needs of learners and investing in growth-driven initiatives, the company has laid a solid foundation for continued success. This quarter’s record performance reflects Stride's capacity to innovate and adapt, making it well-positioned to capitalize on future opportunities in the education sector.Capital Allocation Priorities: The company's capital allocation priorities are centered around driving sustainable growth and creating long-term shareholder value. Organic growth remains a top focus, with investments directed toward enhancing academic quality, improving student outcomes, and advancing technology to personalize learning experiences. Simultaneously, the company is pursuing strategic acquisitions aimed at high-growth, high-margin opportunities that align with its existing operations, fostering synergies and expanding market reach. Additionally, the company is evaluating options to return capital to shareholders, demonstrating a commitment to disciplined financial management.Long-Term Targets Seem Achievable: By fiscal 2028, revenue is expected to grow in the range of $2.70-$3.30 billion, reflecting a 10% compound annual growth rate (CAGR) from fiscal 2023. Adjusted operating income is projected to reach $585-$715 million, with a 20% CAGR, alongside EPS of $6.15-$8.35. These targets emphasize expanding enrollment, increased adoption of virtual education, and strategic investments in high-growth opportunities. With a focus on profitability and operational efficiency, the company is positioned to leverage organic growth and acquisitions, establishing itself as a leader in the growing virtual education market.LRN Stock Trading at a DiscountThe company is trading at a lower forward 12-month price-to-earnings (P/E) ratio compared to its industry peers. This discounted valuation suggests that, despite the stock's recent price gains over the past month, it remains an appealing option for investors seeking a favorable entry point.Image Source: Zacks Investment Research LRN Stock’s Estimate Movement Trending UpwardAnalysts are showing confidence in the stock, as indicated by recent upward revisions in earnings estimates.Image Source: Zacks Investment ResearchLRN Stock Returns Higher Than the IndustryLRN’s trailing 12-month return on equity of 21.2% is better than its industry average of 4.9%. This depicts the company is more efficient at generating profits from its shareholders' investments than its competitors.How to Play Stride Stock?Strid’s leadership in online education, robust financials, and discounted valuation make it a compelling growth story. However, with a 57% rise in one month, investors should consider potential near-term volatility. Long-term investors with a higher risk tolerance might find Stride appealing, given its growth prospects and leadership position in the evolving ed-tech industry.Stride’s fundamentals and growth drivers suggest that the stock remains an attractive buy, even after its recent rally, substantiated by an upward estimate revision trend. This Zacks Rank #1 (Strong Buy) company offers a compelling investment opportunity for those looking to benefit from the evolving ed-tech industry. You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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 Grand Canyon Education, Inc. (LOPE): Free Stock Analysis Report Stride, Inc. (LRN): Free Stock Analysis Report Laureate Education (LAUR): 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