Will Stride's Platform Pains Delay Its Long-Term 2028 Targets?

Core Insights - Stride, Inc. (LRN) is experiencing a significant transition due to technical issues with new technology platforms, leading to lower-than-expected enrollment and a revised guidance for fiscal 2026 [1][2] - The company anticipates a reduction of approximately 10,000-15,000 enrollments for the fiscal year, impacting growth prospects [1][8] Financial Projections - For fiscal 2028, Stride targets revenues between $2.7 billion and $3.3 billion, with a 10% compound annual growth rate (CAGR) at the midpoint [2] - Adjusted operating income is projected to be between $415 million and $585 million, reflecting a 20% CAGR at the midpoint [2] - Earnings per share (EPS) is expected to range from $6.15 to $8.35, also indicating a 20% CAGR at the midpoint [2] Market Position and Competition - Stride's stock has declined by 12.6% over the past month, underperforming compared to the Zacks Schools industry and the broader market [5] - Competitors such as Strategic Education, Inc. (STRA) and American Public Education, Inc. (APEI) have seen their shares increase by 4.5% and 7.7%, respectively, indicating strong competition in the career learning and K-12 services sector [6] Long-term Outlook - Despite short-term challenges, Stride's strategic focus on Career Learning, Adult Learning expansion, and AI integration positions it well for future growth [4][3] - The company is investing heavily in career-focused programs, which aligns with the structural shift in U.S. education towards skills-based pathways [3] Valuation Metrics - LRN is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 7.28, which is significantly lower than its competitors, STRA and APEI, with P/E ratios of 12.15 and 16.57, respectively [9][11] - Recent earnings estimates for fiscal 2026 and 2027 have been revised downward, reflecting ongoing operational challenges, but still imply year-over-year growth of 3.6% and 6.2%, respectively [12][13]