What Happened?
Shares of educational publishing and media company Scholastic (NASDAQ:SCHL) fell 11.3% in the morning session after the company reported weak third-quarter results that missed Wall Street's expectations for both revenue and earnings.
The children's publisher announced revenue of $225.6 million, a decline of 4.9% year on year and a miss on analyst estimates. Its adjusted loss per share also widened to $2.52, which was worse than both the consensus forecast and the loss from the same quarter last year. The company's profitability also deteriorated, with its operating margin contracting and its cash burn increasing significantly compared to the prior year.
While Scholastic did beat expectations for adjusted EBITDA and offered full-year guidance slightly ahead of estimates, these positives were overshadowed by the misses on the top and bottom lines. Overall, the softer-than-expected quarter prompted a negative reaction from investors.
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What Is The Market Telling Us
Scholastic’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for Scholastic and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 5% after reports of a positive consensus rating from Wall Street analysts. The children's publishing, education, and media company currently holds a "Buy" consensus rating, according to three financial analysts. This collective positive outlook suggests that market experts see potential for the stock's value to increase. Such ratings often influence investor sentiment and can be a catalyst for stock price movements, reflecting confidence in the company's financial health and future prospects.
Scholastic is up 15.3% since the beginning of the year, but at $24.38 per share, it is still trading 23.9% below its 52-week high of $32.04 from September 2024. Investors who bought $1,000 worth of Scholastic’s shares 5 years ago would now be looking at an investment worth $1,174.
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