Stride Stock Gains 20% in a Month: Buy Now or Hold Tight?

Core Insights - Stride, Inc. (LRN) has experienced a significant rebound, with a 20% increase in stock price over the past month, outperforming both the Zacks Schools industry and the S&P 500, currently trading around $84.45, still below its 52-week high of $171.17 [1][4]. Financial Performance - Stride's second-quarter fiscal 2026 results show a 7.5% year-over-year revenue growth to $631.3 million, with adjusted operating income rising 17% to $159.0 million and adjusted EBITDA increasing 17% to $188.1 million [8][9]. - For the first half of fiscal 2026, revenue grew 10% to $1.25 billion, and net income increased by 22.6% year-over-year to $168.3 million, driven by disciplined cost management and strong enrollment momentum [9]. - Total enrollments reached a record 248.5K, up 7.8% year-over-year, with Career Learning enrollments rising 17.6% to 111.5K, indicating strong demand for job-focused education [9][11]. Operational Improvements - Stride has resolved previous platform issues, significantly reducing login-related calls by 90%, which enhances user experience and stabilizes operations [7][15]. - Management has reaffirmed fiscal 2026 revenue guidance of $2.48-$2.555 billion and raised adjusted operating income guidance to $485-$505 million, reflecting confidence in overcoming operational challenges [10]. Market Demand and Trends - The long-term outlook for Stride is supported by structural demand for virtual and alternative education, with strong application volumes indicating healthy organic demand [11]. - Enrollment trends show growth in Career Learning, with a 29.3% year-over-year revenue increase, while General Education revenue declined by 3.6% due to mix and funding timing [12]. Financial Strength and Capital Allocation - Stride ended the fiscal second quarter with $676 million in cash and equivalents, maintaining a low leverage ratio of 0.07X, allowing for flexibility in investments and buybacks [16]. - The board has authorized a $500 million share repurchase program, with approximately $89 million completed as of December 31, 2025, providing downside support while funding growth initiatives [17]. Valuation Insights - LRN trades at a forward P/E of 9.47X, below the industry average of 12.66X and its three-year median of 14.06X, indicating that current valuation levels are neither distressed nor overly stretched [18]. - The Zacks Consensus Estimate for fiscal 2026 EPS has increased to $8.36, projecting a 3.2% growth year-over-year, with revenue growth of approximately 5% [21].