Stock on Focus: Scholastic Corporation (SCHL)

Company Profile:

Scholastic Corporation is a publisher and distributor of children’s books. The Company has three segments: Children’s Book Publishing and Distribution, Education and International. The Company’s Children’s Book Publishing and Distribution segment includes the publication and distribution of children’s books, e-books, media and interactive products in the United States through its book clubs and book fairs in its school channels and through the trade channel. Its Education segment includes the publication and distribution to schools and libraries of children’s books, classroom magazines, supplemental classroom materials and print and online reference and non-fiction products for grades pre-K to 12 in the United States. Its International segment includes the publication and distribution of products and services outside the United States by its international operations and its export and foreign rights businesses. Scholastic Corporation was founded in 1920 and is headquartered in New York, New York.

Recent News:

Scholastic is notching sizable growth even as the industry’s sales continues to slide. The circulation of Scholastic’s classroom magazines has increased 15% over the past three years, with more than 250,000 classrooms across the nation buying a subscription.

For the quarter ended February 29, 2016, Scholastic reported revenues of $366 million. Year-on-year change in operating cash flow of 46.67% is about the same as the change in earnings.

 

Fundamental Analysis:

Ninestocks analyzes several different financial aspects: Growth, Profitability, solvency and efficiency.

Growth – Measures the growth of both the company’s income statement and cash flow.

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Profitability – Measures the historical price movement of the stock.

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Solvency – Measures the solvency of the company based on several ratios.

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Efficiency – Measures the strength and historic growth of a company’s return on invested capital.

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Conclusion:

SCHL’s strengths can be seen in its strong growth, good profitability and robust solvency compared with its peers. Technical indicators signal the bullish signs, as there is a bullish cross in Stochastic Oscillator. RSI is increasing to 54.55. The current P/E ratio indicates it is undervalued compared to the average P/E ratio of the industry and the sector. We rate Scholastic Corporation (SCHL) a Strong BUY.

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