Scholastic Earnings Preview

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Investors braced for a bumpy ride ahead of Scholastic's (NAS: SCHL) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Thursday. Scholastic is a publisher and distributor of children's books and a leader in educational technology and children's media.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Scholastic as a buy. But with 66.7% of analysts rating it a buy, Scholastic is still below the mean analyst rating of its nearest nine competitors, which average 68.3% buys. Analysts like Scholastic better than competitor Meredith overall. Three out of seven analysts rate Meredith a buy compared to two of three for Scholastic. Analysts haven't adjusted their rating of Scholastic for the past three months.
  • Revenue forecasts: On average, analysts predict $684.7 million in revenue this quarter. That would represent a rise of 1.3% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $2.33 per share. Estimates range from $2.25 to $2.40.

What our community says:
The majority of CAPS All-Stars see SCHL as a good bet, with 73% awarding it an outperform rating. The majority of the Fools are in agreement with the All-Stars as 67.4% give it an outperform rating. Fools are keen on Scholastic, though the message boards have been quiet lately with only 45 posts in the past 30 days. Scholastic's bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
The company's revenue has now risen for two straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

49.6%

55.7%

49.1%

56.2%

Operating Margin

(10.4%)

9.3%

(8.1%)

19.0%

Net Margin

(8.5%)

4.5%

(6.4%)

11.1%

One final thing: If you want to keep tabs on Scholastic movements, and for more analysis on the company, make sure you add it to your watchlist.

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Earnings estimates provided by Zacks

At the time this article was published

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