Stride, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Stride, Inc. (NYSE:LRN) defied analyst predictions to release its quarterly results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of US$376m, some 3.4% above estimates, and statutory earnings per share (EPS) coming in at US$0.60, 23% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Stride

Following the latest results, Stride's four analysts are now forecasting revenues of US$1.51b in 2021. This would be a meaningful 19% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to step up 19% to US$1.52. Before this earnings report, the analysts had been forecasting revenues of US$1.48b and earnings per share (EPS) of US$1.32 in 2021. So it seems there's been a definite increase in optimism about Stride's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$45.00, suggesting that the forecast performance does not have a long term impact on the company's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Stride's rate of growth is expected to accelerate meaningfully, with the forecast 19% revenue growth noticeably faster than its historical growth of 5.9%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 22% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Stride is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Stride following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that Stride will grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 estimates - from multiple Stride analysts - going out to 2022, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Stride (1 shouldn't be ignored!) that we have uncovered.

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