Stride to Report Q1 Earnings: Time to Buy or Sell This School Stock?

Stride, Inc. LRN is scheduled to report its first-quarter fiscal 2026 results on Oct. 28, after market close.In the last reported quarter, the company’s adjusted earnings per share (EPS) and total revenues topped the Zacks Consensus Estimate by 25.1% and 3.9%, respectively. Also, on a year-over-year basis, both metrics grew 36.3% and 22.4%, respectively.Stride’s earnings topped the consensus mark in three of the trailing four quarters and missed on the remaining occasion. The average surprise can be observed from the chart below.Image Source: Zacks Investment ResearchTrend in LRN’s EstimatesThe Zacks Consensus Estimate for the company’s fiscal first-quarter adjusted EPS has trended upward to $1.23 from $1.19 over the past 60 days. The revised estimated figure indicates 30.9% year-over-year growth from 94 cents.Image Source: Zacks Investment ResearchThe consensus estimate for total revenues is pegged at $614.6 million, indicating a 11.5% increase from $551.1 million reported in the year-ago quarter.Factors Likely to Shape Stride’s Q1 ResultsRevenuesStride’s top-line performance in the fiscal first quarter is expected to have benefited from robust enrollment growth across its General Education and Career Learning segments. The enrollment growth is likely to have been gaining on the back of favorable market trends surrounding demand shifts toward tech-based alternatives and career-focused programs. The company’s diversified offerings, ranging from K12 to adult learning programs, alongside the gradual incorporation of AI in its programs, are expected to have catalyzed its growth prospects. Besides, LRN’s focus on enhancing its K12 Tutoring service is expected to have been an additional benefit. To further this tailwind, the company is presently investing in incorporating AI into its tutoring model.Owing to the favorable market backdrop and the continuous benefits being realized from its in-house efforts, Stride expects fiscal first-quarter enrollment to grow between 10% and 15% year over year.EarningsThe bottom line of Stride is expected to have increased in the to-be-reported quarter due to increased leverage from top-line growth, despite increases in instructional costs and service expenses, alongside elevated selling, general, and administrative (SG&A) expenses. Going forward, the company expects to balance out its business investments and control expenses to ensure margin scale.Nonetheless, the ongoing regulatory reform trends in the United States education industry, accompanied by the robust demand for online full-time K-12 and career education programs, make Stride’s long-term prospects look incremental.What the Zacks Model Says About StrideOur proven model does not conclusively predict an earnings beat for Stride this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here, as you will see below.Earnings ESP: LRN has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: The stock currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.Stride Stock’s Price Performance & ValuationShares of this Virginia-based education company have moved up 18.5% in the past three months, outperforming the Zacks Schools industry, the broader Zacks Consumer Discretionary sector and the S&P 500 index. During the said time frame, a few of the renowned market peers, including Adtalem Global Education ATGE, Grand Canyon Education LOPE and New Oriental Education & Technology Group EDU have been standing above LRN. In the past three months, Adtalem, Grand Canyon Education and New Oriental Education have gained 34.3%, 30.6% and 27%, respectively.Image Source: Zacks Investment ResearchLRN stock is trading at a premium compared with the industry but is lower than its median, on a forward 12-month price-to-earnings (P/E) ratio basis. The overvaluation of the stock compared with its industry peers restricts a favorable entry point for the investors. A thorough evaluation of the fundamentals is recommended before taking any action.Image Source: Zacks Investment ResearchNotably, Adtalem, Grand Canyon Education and New Oriental Education are currently trading at a forward 12-month P/E ratio of 18.96, 22.04 and 16.36, respectively.What Should be Your Take on LRN Stock?Stride’s growth momentum has been supported by double-digit enrollment growth across its General Education and Career Learning segments, as the education market increasingly shifts toward online alternatives and career-focused education. Additionally, AI integration into its K12 and tutoring programs continues to enhance scalability and student outcomes, further strengthening its competitive edge.Although rising instructional and SG&A expenses could modestly weigh on margins, the company’s expanding top line and operational leverage should offset these pressures.Despite trading at a slight valuation premium, Stride’s sustained enrollment momentum, AI-driven initiatives and consistent execution reinforce its strong long-term investment appeal. Thus, investors might consider including LRN stock in their portfolios ahead of the upcoming fiscal first-quarter results amid a favorable market backdrop.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Grand Canyon Education, Inc. (LOPE): Free Stock Analysis Report New Oriental Education & Technology Group, Inc. (EDU): Free Stock Analysis Report Stride, Inc. (LRN): Free Stock Analysis Report Adtalem Global Education Inc. (ATGE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks