Stride: Inexpensively valued e-learning stock

Last Updated: 7. März 2024By

The topic of e-learning received a tremendous boost due to the Corona pandemic. However, it has largely disappeared from the focus of investors again. In my opinion, this is unjustified. Today, I would like to introduce you to a company that stands out in the industry: Stride.

Company profile The US company Stride specializes in online education and offers numerous courses for students, professionals, and general education. The professional development courses cover the areas of health and technology, as well as personnel and talent development.

In addition, employers are able to recruit potential employees through the platform and track and support the progress of enrolled employees. With the help of artificial intelligence, which is used in the form of chatbots, learning success is optimized.

Profitable for a decade While the competition in the online learning sector is mostly reporting losses, Stride stands out for consistently profitable operations for over a decade.

Although Stride’s profit margins were relatively low for a long time, this is where significant developments are currently taking place: Analysts expect a significant increase in profit margins in the coming years. For the current year, analysts‘ forecasts see an average profit growth of over 40%, while revenue is expected to grow by around 10%.

Strong fourth quarter 2023 This trend was already evident in the last quarter. The company reported a +10% increase in revenue to $505 million. This was $4 million more than expected. Profit increased disproportionately by +29% to $1.54 per share, exceeding analysts‘ forecast by 23 cents per share.

Stock is undervalued As an investor, you can currently take advantage of the company’s good prospects without any premium. The valuation is even well below the current market average. Stride currently has a price-earnings ratio (P/E) of only 14. The price-sales ratio (PSR) is also very low at 1.3.

This valuation appears to be very favorable considering the solid revenue growth and significant increase in profit margins. This is probably mainly due to the fact that investors are currently mainly focused on AI trends and largely neglecting other interesting investment stories. But eventually, this is likely to change. For long-term oriented investors, this offers a number of attractive entry opportunities. I count Stride among them.