LRN Stock Study (10-8-25)

Posted by Mark on November 12, 2024 at 07:25 | Last modified: October 8, 2025 10:07

I recently did a stock study on Stride Inc. (LRN) with a closing price of $140.00. The previous study is here.

M* writes:

     > Stride Inc is an American online educational company. It
     > offers alternative programs to traditional on-campus schooling.
     > It also operates state-funded virtual charter schools around the
     > United States. The educational programs for K-12 students are
     > usually monitored by parents and provide virtual classroom
     > environments where teachers meet with students online, by phone,
     > or in-person. The company’s contractual agreements with various
     > school districts to offer its curriculum programs provide a
     > majority of the company’s revenue. The company lines of business
     > are Managed Public School Programs, Institutional, and Private
     > Pay Schools and Other.

Since 2018 (2016-7 excluded due to small base distorting EPS growth rates), this medium-size company has grown sales and EPS at annualized rates of 15.4% and 40.5%, respectively. Lines are up, straight, and parallel except for a sales+EPS dip in ’20 (probably due to COVID-19). Value Line (VL) gives an Earnings Predictability score of 60.

Since 2018 (FY ends Jun 30), PTPM trails peer and industry averages while increasing from 2.9% to 15.9% (’25) with a last-5-year mean of 10.7%. ROE leads peer and industry averages while increasing from 4.5% (’18) to 18.3% (’25) with a last-5-year mean of 14.7%. Debt-to-Capital is lower than peer and industry averages despite increasing from 4.2% (’18) to 27.1% (’25) with a last-5-year mean of 34.5%.

Quick Ratio is 5.1 and Interest Coverage is 37.5 per M* who assigns a “Narrow” [quantitative] Economic Moat and gives a B grade for Financial Health (per BI website). VL gives a Financial Strength grade of B++.

With regard to sales growth:

• YF projects YOY 10.9% and 7.8% for ’26 and ’27, respectively (based on 5 analysts).
• Zacks projects YOY 10.7% and 7.5% for ’26 and ’27, respectively (3 analysts).
• VL projects 9.8% annualized growth from ’25-’29.
• CFRA gives ACE of 10.9% YOY and 9.3% per year for ’26 and ’25-’27, respectively (5).
• M* gives a 2-year ACE of 10.1% per year.

I am forecasting conservatively below the range at 7.0%.

With regard to EPS growth:

• MarketWatch projects 14.9% and 13.3% per year for ’25-’27 and ’25-’28, respectively (based on 7 analysts).
• Nasdaq.com projects 10.2% YOY and 11.4% per year for ’27 and ’26-’28 [4 / 3 / 1 analyst(s) for ’26 / ’27 / ’28].
• Finviz gives ACE 5-year annualized growth of 19.0% per year (4).
• LSEG gives a “LTG forecast” of 20.0%.*
• YF projects YOY 12.0% and 10.5% for ’26 and ’27, respectively (4).
• Zacks projects YOY 8.8% and 10.2% for ’26 and ’27, respectively (3), and 5-year annualized growth of 20.0%.
• VL projects 11.1% annualized growth from ’25-’29.
• CFRA gives ACE of 52.4% YOY and 29.8% per year for ’26 and ’25-’27 [4; projected ’26 acceleration quite steep!].
• M* projects long-term annualized growth of 20.0%.

My 11.0% forecast is below the long-term-estimate range (mean of five: 18.0% per year). Initial value is ’25 EPS of $5.95/share.

My Forecast High P/E is 15.0. Since 2018, high P/E ranges from 15.6 in ’24 to 52.6 in ’20 with a last-5-year mean of 21.3 and a last-5-year-mean average P/E of 15.7. I am below the range.

My Forecast Low P/E is 10.0. Since 2018, low P/E declines from 18.7 to 10.6 (’25) with a last-5-year mean of 10.1. I am forecasting near bottom of the range (only 7.6 in ’24 is lower).

My Low Stock Price Forecast (LSPF) of $63.30 is the 52-week low: 54.8% less than the previous closing price. Default based on initial value from above is $59.50, which is 57.5% less than previous close.

These inputs land LRN in the HOLD zone with a U/D ratio of 0.1. Total Annualized Return (TAR) is 1.5%.

PAR (using Forecast Average—not High—P/E) is prohibitive for any size company at negative 2.2%. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on the total annualized return (TAR) of 1.5% but even that is well below the risk-free rate (T-bills).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 74 studies (my study and 26 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 10.0%, 15.9%, 21.3, and 12.0, respectively. I am lower across the board. VL’s projected average annual P/E of 18.0 is greater than MS (16.7) and much greater than mine (12.5).

MS high / low EPS are $12.74 / $6.02 versus my $10.03 / $5.95 (per share). My high EPS is less due to a lower growth rate. Value Line comes in the middle at $11.10.

MS Low Stock Price Forecast (LSPF) of $81.70 implies Forecast Low P/E of 13.6: greater than the above-stated 12.0. MS LSPF is 13.1% greater than the default $6.02/share * 12.0 = $72.24 resulting in more aggressive zoning. MS LSPF is also 29.1% greater than mine.

With regard to valuation, PEG is 0.8 and 1.9 per Zacks and my projected P/E, respectively: fairly valued. M* gives 0.4 with a current P/E of 23.5 thereby implying a growth rate of 23.5 / 0.4 ~ 58.7% (possibly in the ballpark of CFRA’s ’26 ACE). Relative Value [(current P/E) / 5-year-mean average P/E] is overcooked at 1.48.

MOS is strong in the current study because my inputs are below MS and near or below respective analyst/historical ranges. Also consistent is a MS TAR that is 12.2% per year greater than my 1.5%.

This appears to be a high-quality company whose stock heeds the fundamentals. I find these issues very tough to buy. Were I allocating a portion of my portfolio to a momentum strategy, things might be different.

U/D has LRN a BUY under $85/share. Given a forecast high price just over $150, the stock needs to approach $75 (no dividend) in order to meet the BI TAR criterion (double in five years).

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* — Google AI reports: “while there is no fixed period for the ‘long-term growth’ (LTG)
       forecast on a London Stock Exchange Group (LSEG) detailed stock report, it typically
       reflects an average estimate over a three- to five-year time frame. This forecast
       horizon can vary depending on the analyst or research firm providing the data.”