Scholastic (NASDAQ:SCHL) Shares Gap Down After Earnings Miss

Key Points

• Scholastic shares fell sharply, opening at $29.88 versus the prior close of $34.83, after the company reported a quarterly loss of $3.63 per share, wider than the $3.42 consensus estimate.
• Revenue declined 4% year over year to $216.8 million and missed expectations, with weakness in Children’s Book Publishing and Education partly offset by growth in Entertainment and international revenue. Operating cash use also increased to $94.6 million.
• Despite the disappointing quarter, Scholastic reaffirmed its fiscal 2027 targets and declared a quarterly dividend of $0.25 per share, representing a 3.1% yield; analysts maintain a consensus “Hold” rating with a $42 price target.

Scholastic Corporation (NASDAQ:SCHL - Get Free Report)'s stock price gapped down before the market opened on Friday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $34.83, but opened at $29.88. Scholastic shares last traded at $31.9850, with a volume of 170,425 shares changing hands.

The company reported ($3.63) earnings per share (EPS) for the quarter, missing analysts' consensus estimates of ($3.42) by ($0.21). Scholastic had a net margin of 3.58% and a return on equity of 5.29%. The company had revenue of $216.80 million for the quarter, compared to analyst estimates of $224.69 million.

Scholastic Dividend Announcement

The company also recently announced a quarterly dividend, which will be paid on Tuesday, December 15th. Stockholders of record on Friday, October 30th will be issued a $0.25 dividend. The ex-dividend date is Friday, October 30th. This represents a $1.00 annualized dividend and a dividend yield of 3.1%. Scholastic's dividend payout ratio is currently 42.74%.

Key Headlines Impacting Scholastic

Here are the key news stories impacting Scholastic this week:

• Positive Sentiment: Scholastic reaffirmed its fiscal 2027 targets, including approximately 2%–4% revenue growth, adjusted EBITDA of $135 million–$145 million, and free cash flow of $35 million–$40 million. Management expects momentum to improve as the fall Book Fairs season progresses. Scholastic fiscal 2027 outlook
• Positive Sentiment: Entertainment revenue increased by $6.5 million to $20.1 million, while international revenue rose by $1.1 million to $60.5 million, providing some offsets to weakness in other businesses. Scholastic first-quarter revenue details
• Neutral Sentiment: Zacks upgraded Scholastic from “strong sell” to “hold,” indicating a less negative analyst stance but not a bullish recommendation. Zacks Scholastic earnings report
• Negative Sentiment: Fiscal first-quarter revenue fell 4% year over year to $216.8 million, missing the $224.69 million analyst estimate. Children’s Book Publishing and Distribution revenue declined by $3.6 million, while Education revenue dropped by $9.7 million to $30.4 million. Scholastic first-quarter results
• Negative Sentiment: Scholastic reported a loss of $3.63 per share, wider than the $3.42 consensus loss and the $2.52 loss recorded a year earlier. Operating cash use also increased to $94.6 million from $81.8 million, raising concerns about near-term profitability and cash flow. Why Scholastic shares fell after hours

Wall Street Analysts Forecast Growth

SCHL has been the subject of a number of recent analyst reports. Zacks Research raised shares of Scholastic from a "strong sell" rating to a "hold" rating in a research report on Tuesday. Weiss Ratings raised Scholastic from a "hold (c)" rating to a "hold (c+)" rating in a report on Friday, September 11th. Finally, B. Riley Financial increased their price target on Scholastic from $40.00 to $42.00 and gave the company a "neutral" rating in a research report on Wednesday, July 8th. Three analysts have rated the stock with a Hold rating, According to data from MarketBeat.com, the stock currently has a consensus rating of "Hold" and a consensus price target of $42.00.

Insider Buying and Selling

In other news, Director Kaya Henderson sold 3,250 shares of the stock in a transaction that occurred on Thursday, August 6th. The shares were sold at an average price of $40.25, for a total transaction of $130,812.50. Following the completion of the transaction, the director directly owned 7,113 shares of the company's stock, valued at $286,298.25. This represents a 31.36% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. Also, EVP Iole Lucchese sold 289,624 shares of the firm's stock in a transaction that occurred on Wednesday, August 26th. The stock was sold at an average price of $39.76, for a total transaction of $11,515,450.24. Following the sale, the executive vice president owned 289,623 shares of the company's stock, valued at approximately $11,515,410.48. The trade was a 50.00% decrease in their position. The disclosure for this sale is available in the SEC filing. Over the last 90 days, insiders sold 294,986 shares of company stock worth $11,731,334. Insiders own 12.77% of the company's stock.

Hedge Funds Weigh In On Scholastic

Several institutional investors have recently bought and sold shares of SCHL. Meeder Asset Management Inc. bought a new position in shares of Scholastic during the 2nd quarter worth $43,000. Integrated Wealth Concepts LLC bought a new stake in Scholastic in the 2nd quarter valued at about $56,000. State of Wyoming purchased a new stake in Scholastic during the second quarter valued at about $115,000. Fifth Third Bancorp boosted its position in Scholastic by 5,351.0% during the first quarter. Fifth Third Bancorp now owns 5,451 shares of the company's stock worth $213,000 after purchasing an additional 5,351 shares during the period. Finally, Commonwealth of Pennsylvania Public School Empls Retrmt SYS bought a new position in Scholastic during the first quarter worth about $221,000. Hedge funds and other institutional investors own 82.57% of the company's stock.

Scholastic Price Performance

The stock has a market cap of $610.89 million, a PE ratio of 13.86, a P/E/G ratio of 1.68 and a beta of 1.01. The company has a debt-to-equity ratio of 0.10, a current ratio of 1.23 and a quick ratio of 0.78. The firm's 50 day moving average price is $39.71 and its two-hundred day moving average price is $40.45.

About Scholastic

Scholastic Corporation is a global children's publishing, education and media company. Founded in 1920 by M. R. Robinson, the company develops and distributes books, classroom materials, digital learning resources and educational media for children, families, teachers and schools.

Its publishing portfolio includes original and licensed children's books, series and educational titles, while its education business provides classroom magazines, supplemental curriculum materials, professional learning resources and digital platforms.

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