LRN Stock Study (10-20-26)

Posted by Mark on November 3, 2026 at 07:21 | Last modified: October 20, 2026 11:35

I recently did a stock study on Stride Inc. (LRN, $80.99). previous studies are here and 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 (’17 excluded due to small base exaggerating EPS growth rate), this medium-size company grows sales and EPS at annualized rates of 14.5% and 38.9%, respectively (FY ends Jun 30). Lines are mostly up, straight, and parallel except for EPS decline in ’20. Value Line (VL) gives an Earnings Predictability score of 65. Shares outstanding increase 16.5% (1.9%/year).

Since 2018, PTPM is about even with peer and industry averages while increasing from 2.9% to 17.5% (’26) with a last-5-year mean of 12.9%. ROE leads peer and industry averages while increasing from 4.5% to 18.0% (’26) with a last-5-year mean of 16.5% (shareholder equity consistently positive and increasing 13.6%/year). Debt-to-Capital is less than peer and industry averages despite increasing from 4.2% to 25.1% (’26) with a last-5-year mean of 32.1%.

Quick ratio is 5.6 and interest coverage 38 per M* who assigns no Economic Moat and only a C grade for Financial Health (per BI website). VL gives a B+ rating for Financial Strength.

The M* quantitative report says: “At face value, Stride Inc looks inexpensive, following a substantial price decline over the past year. To account for the risk of a possible value trap, we have capped its rating at 3 stars. The stock currently trades at a 34% discount to our quantitative fair value estimate of $122.54 per share; however, caution is warranted due to this estimate’s high uncertainty rating.”

RightStock—a new tool on the BI website that I am tracking for informational purposes—gives a fitness score of 83 (“strong”) and opportunity score of 97 (“excellent”).

With regard to sales growth:

• YF gives YOY ACE 2.0% and 5.0% for ’27 and ’28, respectively (based on 2 analysts).
• Zacks gives YOY ACE 0.6% and 4.1% for ’27 and ’28, respectively (3 analysts).
• VL projects 4.2% per year from ’26-’30.
• CFRA projects 2.0% YOY and 3.6% per year for ’27 and ’26-’28, respectively.
• M* gives 2-year annualized ACE of 3.1%.

My 3.0% forecast is less than the long-term estimate.

With regard to EPS growth:

• MarketWatch gives ACE 2.4% YOY and 3.9% per year for ’27 and ’26-’28 (based on 6 analysts).
• Nasdaq.com gives ACE 7.2% YOY for ’28 (3 analysts).
• LSEG has LTG at 20.0%.
• YF gives YOY ACE of 4.7% and 6.3% for ’27 and ’28, respectively (3).
• Zacks gives YOY ACE 3.4% and 7.1% for ’27 and ’28 along with 5-year annualized 20.0% (3).
• VL projects 7.6% per year from ’26-’30.
• CFRA projects 22.3% YOY and 14.0% per year for ’27 and ’26-’28, respectively.
• M* gives long-term ACE of 20.0%.

I have concerns about the EPS data set. First, no estimates are available from Seeking Alpha or Finviz (we usually at least get the latter). Second, the only long-term estimate besides VL is 20.0% from three different sources that suggests data duplication (one is Zacks who I generally regard as independent). Third, we have a long-term ACE from M* that I don’t usually see when the M* report is quantitative (no assigned analyst).

My 5.0% forecast is well below the long-term-estimate range [mean of four (two): 16.9% (13.8%)] especially given the anemic sales projections. Initial value is ’26 EPS of $7.14/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 last-5-year mean of 19.9 and a last-5-year-mean average P/E of 14.7. I am below the range.

My Forecast Low P/E is 8.0. Since 2018, low P/E falls from 18.7 to 8.5 (’26) with a last-5-year mean of 9.4. I am forecasting near bottom of the range (only 7.6 in ’24 is less).

My Low Stock Price Forecast (LSPF) of $57.10 is default based on initial value from above: 29.5% less than previous close and 5.8% less than the 52-week low.

These inputs land LRN in the HOLD zone with a U/D ratio of 2.3. Total Annualized Return (TAR) is 11.0%.

PAR (using Forecast Average—not High—P/E) of 5.3% is less than I seek for a medium-size company. If a solid margin of safety (MOS) backs this study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on only 23 studies (too small for anything but anecdotal comparison) done in the past 90 days (my study and 5 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 6.0%, 13.1%, 18.0, and 9.4, respectively. I am lower across the board. VL projects a future average P/E of 14.0 that is greater than MS (13.7) and greater than mine (11.5).

MS high / low EPS are $13.03 / $6.97 versus my $9.11 / $7.14 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $11.30 is in the middle.

MS LSPF of $63.00 implies a Forecast Low P/E of 9.0: less than the above-stated 9.4. MS LSPF is 3.8% less than the default $6.97/share * 9.4 = $65.52 resulting in more conservative zoning. MS LSPF is 10.3% greater than mine, however.

MOS is robust in the study because my inputs are below/near most historical/analyst/MS estimates and ranges. Also suggestive of MOS is MS TAR exceeding mine by 12.4% per year and my lower LSPF.

With regard to valuation, PEG is 0.47 and 2.1 per Zacks and my projected P/E (mind the low growth rate), respectively: fairly valued on average (0.34 per M* is in Zacks’ ballpark). Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.76. “Quick and dirty” cash flow (excluding capex, with runs contrary to Google AI’s guideline) has stock undervalued by 42%. M* reports stock at a 33% discount.

Valuation metrics unusually display lots of agreement—also consistent with the possibility of being a value trap. Those in search of only high-quality growth stocks may wish to look elsewhere.

Despite already boosting growth estimates, I am doubling down on MOS due to the reasonable doubt expressed above. I might boost further were MS sample size larger. I’m just hard-pressed to accept a 20.0% EPS growth rate given the low short-term projections and limited number of analysts weighing in.

Per my SSG, LRN is a U/D BUY under $77 share. Given forecast high price ~$137, [136.7 / ((14.87 / 100 ) +1 ) ^ 5] ~ $68 meets the BetterInvesting® TAR criterion.

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