EdTech Unicorn Stride Surges: Strong Financials Fuel Rally!

The EdTech revolution is progressing rapidly! As technology advances, internet access grows swiftly, and students seek innovative learning methods, the global EdTech market is flourishing.

Global Edtech Market - Regional Analysis

North America currently holds a significant 37.3% share, but regions such as the Middle East and Africa, Europe, and Asia-Pacific are gaining ground, fueled by government support, digital literacy, and a burgeoning middle class. It’s an exciting time for digital learning, and there’s even more to look forward to!

โ—‰ EdTech Market Growth Outlook

EdTech-Market
Riyad Bank - Technical Analysis (Daily)
  • Valuation projected to rise from $220.5 million in 2023 to $810.3 million by 2033.
  • Compound Annual Growth Rate (CAGR) of 13.9%.

โ—‰ Government Initiatives Supporting EdTech Sector

  • The US Department of Education has allocated $277 million in new grants through the Education Innovation and Research program to enhance educational equity and innovation, particularly in areas affected by the COVID-19 pandemic, specifically focusing on STEM education and rural regions.

Recognizing the enormous opportunity in EdTech, we’re examining a stock that exhibits remarkable growth potential within the sector.

โ—‰ Stride (NYSE:LRN) - Company OVERVIEW

Stride Inc. is a tech-driven education service provider offering proprietary and third-party online curricula, software, and services in the U.S. and globally. Their products support personalized learning for K-12 students through virtual and blended public schools, individual online courses, and supplemental materials in subjects like math, English, science, and history. Stride also emphasizes career learning in fields such as IT, healthcare, and business, and operates tuition-based private schools. Additionally, they provide post-secondary programs in software engineering and healthcare under brands like Galvanize and Tech Elevator, along with staffing services. Rebranded from K12 Inc. in December 2020, Stride has been incorporated since 1999 and is headquartered in Reston, Virginia.

Market Capitalization – $3.31 B

โ—‰ Stride (NYSE:LRN) - STOCK RECOMMENDATION

Idea BUY
Buy Range 77 – 80
Target 115 – 120
Duration 12 – 18 Months
Potential Returns 45 – 50%
Idea Buy Range Target Duration Potential Returns
BUY 77 – 80 115 – 120 12 – 18 Months 45 – 50%

* Once the first target hit, reset the StopLoss at your buying price.

Our recommendations are authentic and transparent. Find this recommendation posted in Tradingview. Be assured such records are permanent and irreversible.

โ—‰ Stride (NYSE:LRN) - Peer Companies

Stride (NYSE:LRN) - Peer Companies
  • Graham Holdings (NYSE: GHC) – $3.23 B
  • Adtalem Global Education (NYSE: ATGE) – $2.67 B
  • Grand Canyon Education (NASDAQ: LOPE) – $4.04 B
  • Laureate Education (NASDAQ: LAUR) – $2.25 B

โ—‰ Stride (NYSE:LRN) - TECHNICAL ANALYSIS

LRN-MONTHLY TECHNICAL ANALYSIS
Stride (NYSE:LRN) - Technical Analysis

Monthly

  • The stock price initially faced resistance at $40 in 2011 but later found support at $17.
  • Despite several attempts to break through resistance, the stock experienced significant declines.
  • However, after a 12-year period, it finally broke out and rallied to a high of $84.
  • Currently trading at $77.7, the stock is expected to continue rising in the near future

Daily

  • The daily chart indicates a clear uptrend in the price movement.
  • An ascending triangle pattern has formed, and following the breakout, the price has retraced to the breakout level.
  • At this moment, the price is attempting to find support at the 50 EMA.
  • From a technical standpoint, the stock is resting at a support level, making it an attractive option for accumulation with a mid to long-term investment outlook.

โ—‰ Stride (NYSE:LRN) - RELATIVE STRENGTH

Relative Performance - Last 1 Year

LRN —     US Smallcap 2000 —

  • The chart clearly illustrates that Stride Inc. has greatly outperformed the US Smallcap 2000 index, achieving an impressive annual return of 82%, which is a notable achievement.

โ—‰ Stride (NYSE:LRN) - Revenue & Profit Analysis

โ— Year-on-year

Stride (NYSE:LRN) - Revenue & Profit Analysis - Year-on-year
  • In FY24, revenue surged by 11.3%, reaching $2,040 million, up from $1,837 million in FY23.
  • EBITDA saw a substantial boost, climbing to $295.3 million in FY24 compared to $225.2 million the previous year.
  • The EBITDA margin also experienced growth, rising to 14.47% from 12.26% in FY23.
  • Additionally, diluted EPS witnessed an impressive increase of 57.91%, jumping to $4.69 in FY24 from $2.97 in FY23.

โ— Quarter-on-quarter

Stride (NYSE:LRN) - Revenue & Profit Analysis - Quarter-on-quarter
  • In the latest June quarter, the company achieved a remarkable milestone with quarterly sales reaching an all-time high of $520.8 million. This marks a 3% increase from the $504.9 million recorded in the March quarter and a significant 10.75% rise compared to $470.3 million in the same quarter last year.
  • EBITDA declined from $100.2 million to $82.3 million in the latest quarter, representing a 17.8% decrease.

โ—‰ Stride (NYSE:LRN) - Valuation

โ— P/E RATIO

Current P/E Ratio vs. Median P/E Ratio

Stride (NYSE:LRN) - PE Ratio
  • The present price-to-earnings ratio for this stock is 16.2x, which is considerably below its four-year median price-to-earnings ratio of 18.9x times, indicating that the stock is currently undervalued.

Current P/E vs. Peer Average P/E

PE vs Peers PE
Stride (NYSE:LRN) - Current P/E vs. Peer Average P/E
  • The stock presents a favorable valuation when considering its Price-To-Earnings Ratio of 16.2x, which is lower than the average of its peers at 18.3x.

Current P/E vs. Industry Average P/E

PE vs Industry PE
Stride (NYSE:LRN) - Current P/E vs. Industry Average P/E
  • Stride appears to be offered at a more competitive price, featuring a Price-To-Earnings Ratio of 16.2x, which is significantly below the average of 19.2x for the US Consumer Services industry.

โ— P/B Ratio

Current P/B vs. Peer Average P/B

PB vs Peers PB
Stride (NYSE:LRN) - Current P/B vs. Peer Average P/B
  • The present P/B ratio in relation to the average P/B of peers indicates that the stock is somewhat higher, with a ratio of 2.8x in contrast to the peer average of 2.6x.

Current P/B vs. Industry Average P/B

PB vs Industry PB
Stride (NYSE:LRN) - Current P/B vs. Industry Average P/B
  • When comparing the current P/B ratio to the industry average, Stride appears to be considerably overvalued, exhibiting a P/B ratio of 2.8x, while the industry average stands at 1.6x.

โ—‰ Stride (NYSE:LRN) - Cash Flow Analysis

  • The cash generated from operations has experienced substantial growth in fiscal year 2024, increasing to $278.8 million from $203.2 million in fiscal year 2023.

โ—‰ Stride (NYSE:LRN) - Debt Analysis

  • Stride has a total debt of $528.2 million, resulting in a debt-to-equity ratio of 0.44.
  • The company generates sufficient interest income to exceed its interest expenses, indicating that interest payment coverage is not an issue.

โ—‰ Stride (NYSE:LRN) - Top Shareholders

Top Shareholders
Stride (NYSE:LRN) - Top Shareholders
  • BlackRock Inc. holds a significant ownership interest in this company, with a notable stake of 14.9%. This level of investment reflects BlackRock’s confidence in the company’s potential for growth and profitability.
  • The Vanguard Group also maintains a considerable presence, owning 10.7% of the company’s shares.
  • Together, these two investment giants represent a substantial portion of the company’s equity, indicating strong institutional support and interest in its future performance.

โ—‰ Conclusion

Upon examining Stride Inc.’s financial performance, we focused on essential metrics such as revenue growth, profit margins, and the stability of cash flow. Additionally, we assessed the company’s future growth potential by looking into industry trends and the competitive landscape.

As a result, we are confident that Stride Inc. is positioned to capitalize on new opportunities while effectively navigating challenges, making it an attractive option for both investors and stakeholders.

โ—‰ Stride (NYSE:LRN) - TRADINGVIEW POSITION UPDATE

MONEY MANAGEMENT AND TRADING RULES

1)ย  Itโ€™s advisable to enter/exit in the recommended range.
2)ย  Strictly follow the StopLoss as mentioned. Honour it.
3) ย Use trailing StopLoss to retain profits.
4)ย  Diversify trading capital into our other trading recommendations.
5)ย  Risk only the money what you can afford to lose. Hedge accordingly.

Advisor / ANALYST SUMMARY

The stock trading advice is prepared by the Naranj Capital team under the guidance ofย Arijit Banerjee, CMT, CFTe. Arijit is a veteran trader and an active investor having in-depth knowledge of financial market research, advanced technical analysis, market cycle, algorithmic trading, and portfolio management. He is a Chartered Market Technician (CMT) accredited by CMT Association USA, the global authority of Technical Analysis and also has been honored as aย Certified Financial Technician (CFTe)ย by the International Federation of Technical Analysts, USA.

Disclosure

The views expressed herein are based solely on information available publicly/internal data/other sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to accuracy. The recommendations provided herein is solely for informational purposes and are not intended to be and must not be taken alone as the basis for an investment/trading decision. Trading and investing are subject to market risk and the securities discussed and opinions expressed herein may not be suitable for all investors. To read the full disclosure, please click here.

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