Shares of educational publishing and media company Scholastic (SCHL, Financial) jumped 7.52% today after the company reported third-quarter earnings results.
Scholastic (SCHL, Financial) beat analysts' revenue and EPS expectations. This performance was primarily driven by growth in school reading events, including book fairs and clubs, suggesting a successful back-to-school season.
Currently, Scholastic is trading at $32.45. According to the JSON data, the company's market capitalization stands at $917.22 million. The stock has a PE ratio of 83.21, which indicates its valuation might be on the high side. However, the PB ratio is notably low at 0.9, suggesting that the stock could be undervalued from a book value perspective.
The company's financial health shows some concerns. Scholastic has an Altman Z-Score of 2.73, placing it in the grey area, which implies some financial stress. Additionally, the dividend payout ratio stands at 1.03, signaling that the dividend may not be sustainable in the long run. However, Scholastic's Beneish M-Score of -2.95 indicates that it is unlikely to be a manipulator.
From a growth perspective, the company has shown a mixed performance. Revenue growth over the last three years was 11.3%, outperforming its industry median of 5.9%. However, EBITDA growth over the same period was relatively modest at 22%, with the industry median being 5.8%.
On the positive side, Scholastic (SCHL, Financial) offers a dividend yield close to a three-year high. With a forward dividend yield of 2.45%, it could be considered attractive for income-focused investors.
Notably, the stock's GF Value is estimated at $43.33, which suggests it is modestly undervalued. This valuation metric takes into account the company's historical trading multiples, past business growth, and analyst estimates of future business performance.
In terms of insider activity, there were two insider buying transactions over the past three months, cumulatively totaling 3,328 shares. This could be interpreted as a positive sign of confidence from the management team.
Overall, while Scholastic (SCHL, Financial) has shown promising revenue growth and boasts a solid dividend yield, potential investors should be mindful of the financial stress indicators and high PE ratio. The stock appears to be moderately undervalued based on its GF Value, which could present an opportunity for long-term investors.
