Results: Stride, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Last week, you might have seen that Stride, Inc. (NYSE:LRN) released its quarterly result to the market. The early response was not positive, with shares down 2.3% to US$60.25 in the past week. Revenues were US$505m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.54 were also better than expected, beating analyst predictions by 17%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Stride

Taking into account the latest results, the most recent consensus for Stride from five analysts is for revenues of US$2.01b in 2024. If met, it would imply a credible 3.7% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 5.4% to US$4.25. In the lead-up to this report, the analysts had been modelling revenues of US$2.00b and earnings per share (EPS) of US$3.95 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$70.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Stride, with the most bullish analyst valuing it at US$75.00 and the most bearish at US$65.00 per share. This is a very narrow spread of estimates, implying either that Stride is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Stride's revenue growth is expected to slow, with the forecast 7.5% annualised growth rate until the end of 2024 being well below the historical 15% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it seems obvious that Stride is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Stride's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Stride's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$70.50, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Stride. Long-term earnings power is much more important than next year's profits. We have forecasts for Stride going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Stride that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.