Stride Stock Hits New 52-Week High: Should You Buy, Hold or Fold?

Enrollment Growth and Market Demand - Enrollment growth is a key driver for Stride, with total enrollment increasing by 18.5% year-over-year to 222.6K in Q1 FY2025, the highest since the pandemic [2] - General Education (K-12) enrollment grew by 11.3% to 130.9K, while Career Learning (Middle-High School) surged by 30.4% to 91.7K [2] - The company benefits from strong demand for virtual and blended educational programs, supported by regulatory reforms under the Trump administration [1] Financial Performance and Targets - Stride aims to achieve fiscal 2028 targets, including revenue growth of $2.70-$3.30 billion (10% CAGR) and adjusted operating income of $415-$585 million (20% CAGR) [10] - EPS is projected to grow to $6.15-$8.35 by FY2028, reflecting a 20% CAGR [10] - The company's liquidity position is strong, with $539.4 million in cash, cash equivalents, and marketable securities as of Sept 30, 2024, against long-term debt of$415.1 million [11] Stock Performance and Valuation - LRN stock has outperformed the market, rising 58.3% in the past six months, surpassing the Zacks Schools industry, Consumer Discretionary sector, and S&P 500 Index [7] - The stock is trading at a discount compared to industry peers on a forward 12-month P/E ratio basis, making it an attractive entry point for investors [12] - Technical indicators show LRN trading above both the 50-day and 200-day SMAs, signaling a bullish trend [19] Operational Efficiency and Capital Allocation - Stride focuses on balanced capital allocation, utilizing free cash flow for business growth and shareholder returns [18] - The company is leveraging organic growth and acquisitions to establish itself as a leader in the virtual education market [10] - Continuous investments in technology and innovation are driving enrollment growth and enhancing product offerings [17] Challenges and Cost Pressures - Increased instructional costs and services rose to $335.2 million in Q1 FY2025, up from$307.3 million year-over-year, potentially hindering performance [5] - Inflationary pressures and delays in software development products may impact the Adult Learning segment's revenue growth [14] - Despite cost challenges, the company remains focused on operational efficiency to sustain growth [22]