CANADA – 2025/06/03: In this photo illustration, the Stride logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
We believe Stride (NYSE: LRN) stock merits attention: It is expanding, generating cash, and presently offered at a considerable valuation discount. Firms like this can utilize cash to drive further revenue enhancement or simply reward their shareholders through dividends or stock repurchases. Both approaches make them appealing to the market.
What Is Happening With LRN
LRN is trading at a notable discount compared to its highs over the past 3 months, 1 year, and 2 years. This situation is largely a result of significant platform implementation challenges in mid-2025, resulting in 10,000-15,000 fewer enrollments and increased expenses. Ongoing legal disputes concerning earlier enrollment data have also added to the uncertainty.
Here’s what is going positively for the company: Persistent strong demand is evident, with Career Learning enrollments increasing by 20% in Q1 FY26. A robust balance sheet holds $749.6 million in cash and a 0.32 debt-to-equity ratio. Fiscal 2026 revenue expectations remain at $2.48 billion to $2.555 billion, demonstrating resilience and a valuation discount due to recent challenges.
LRN Has Strong Fundamentals
- Cash Yield: Stride provides a remarkable cash flow yield of 10.4%.
- Growing: Revenue has surged by 17.3% over the last twelve months, indicating that the cash reserves will continue to grow.
- Valuation Discount: LRN shares are currently priced at 55% less than their 3-month peak, 59% below their 1-year apex, and 59% below their 2-year peak.
Below is a concise comparison of LRN fundamentals against the S&P medians.
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But What About The Risk Involved?
While LRN stock presents an enticing investment opportunity, it’s beneficial to remain cognizant of a stock’s history of drawdowns. LRN was not exempt from market turbulence either. It declined approximately 58% during the Global Financial Crisis and 59% during the Covid market downturn. The 2018 correction erased nearly 49%, while the inflation surge last year triggered a smaller drop of around 33%. Even with strong fundamentals, LRN indicates that significant pullbacks can occur when the market shifts. This serves as a reminder that risk is always present, regardless of how robust the narrative appears. However, the risk isn’t confined to major market crashes. Stocks can decline even during favorable market conditions — think events like earnings announcements, business updates, and shifts in outlook. Read LRN Dip Buyer Analyses to explore how the stock has rebounded from sharp declines in the past.
If you wish to gather more information, read Buy or Sell LRN Stock.
Other Stocks Like LRN
Not prepared to invest in LRN? You might consider these alternatives:
We selected these stocks based on the following criteria:
- Market cap exceeding $2 billion
- Positive revenue growth
- High free cash flow yield
- Significant discount to 3M, 1Y, and 2Y highs
A portfolio formed as of 12/31/2016 using stocks that meet the aforementioned criteria would have exhibited the following performance:
- Average returns of 25.7% and 57.9% for the 6-month and 12-month periods, respectively
- Win rate (percentage of selections yielding positive returns) of >70% for both the 6-month and 12-month durations
Stock Picking Falls Short Against Multi-Asset Portfolios
Individual stock selections can be volatile, but diversified assets tend to balance each other out. A multi-asset portfolio can help maintain direction, capitalize on upward trends, and mitigate downside risk.
The asset allocation strategy utilized by Trefis’ Boston-based wealth management partner generated positive returns during the 2008-09 period when the S&P 500 declined by over 40%. Our partner’s current strategy involves the Trefis High Quality Portfolio, which has a consistent track record of comfortably outperforming its benchmark, which encompasses all three indices — the S&P 500, S&P mid-cap, and Russell 2000.